Stocks that provide dividends are an excellent way to build long-term wealth. Not only do dividends provide investors with regular income, but dividend stocks can also help investors weather market volatility. How? Whether the markets are going up, down, or sideways, dividends provide investors with a steady income stream.
Having said that, while dividends are usually paid out quarterly, at the discretion of the company’s board of directors, they can be raised, cut, or eliminated.
Not all dividend stocks are created equal. As a result, there are a number of factors investors need to consider when looking at dividend stocks.
Dividend yield is one of the most important factors to consider when investing in dividend stocks. It might be tempting to just invest in a stock with the highest dividend yield, but there is a risk/reward trade off when it comes to dividend-yielding stocks—the higher the yield, the greater the risk.
Stocks that provide an annual dividend of 10% or more tend to be very risky. Because they are risky, there is a greater chance the dividend could be cut—or worse, the share price could plummet. This means investors lose out on dividend growth and capital appreciation.
History is another important factor to consider. Look for stable companies that have a long history (five, 10, or even 25+ years) of both paying an annual dividend and increasing that dividend annually. Those stocks that offer annual dividend growth as part of their corporate culture are more likely to continue that trend.
The best way to determine whether or not a company can continue to provide an annual dividend and raise its yield is to look at the company’s free cash flow. Free cash flow is the amount of free cash, or money left over after it pays for operations and necessary capital expenditures. The more money a company has in the bank, the greater the chances are that it can sustain or increase its high dividend yield.
This Dividend Stock Has Soared 751% Since 2009 If you ask people to list the top investments of the past decade, they’d likely say biotech or electric vehicles. Few, however, would likely mention this obscure dividend stock: WD-40 Company (NASDAQ:WDFC)..
1 High-Yield Stock to Think About If you’ve been following high-yield stocks and someone tells you that you should consider a 13% yielder, you’d probably shake your head. And frankly, I would be skeptical, too. We are currently in a.
MED Stock Now a High-Yield Stock With a market capitalization of just over $1.0 billion, Medifast Inc (NYSE:MED) isn’t really big enough to make headlines in the financial media. However, the company recently did something that deserves income investors’ attention:.
Big, Safe Dividend Income From Northrop Grumman Corporation Turkey invaded northern Syria. China threatened to attack Taiwan. Iran resumed the construction of nuclear weapons. It’s a scary world out there (except to defense contractors). America spends $738.0 billion a year.
These Dividend Stocks Often Soar Whenever This Happens Recently, an event took place that could trigger outsized returns for a certain group of dividend stocks. In October, Bloomberg reported that commodity hedge fund Blenheim Capital Management will shut its doors..
This High-Yield Stock Looks Interesting In this day and age, most investors would agree that a dividend yield of 7.3% is quite impressive. What’s even more impressive is that the company behind this 7.3% yield has actually been paying more.
1 High-Yield Stock to Think About Beaten-down stocks can offer some of the biggest yields, with Macerich Co (NYSE:MAC) being the latest example. Headquartered in Santa Monica, California, Macerich is a real estate investment trust (REIT) that acquires, leases, manages,.
Finally: High-Yield Stocks That Pay Safe Dividends I trust most high-yield stocks for income about as much as I trust Wesley Snipes for tax advice. Sure, the payouts look tempting. But many investors have skipped over these businesses for good.
Big Investors Should Pay Dividends for Disney Stock For years, Walt Disney Co (NYSE:DIS) has put smiles on children’s faces. What’s less well known is that Disney stock has made plenty of income investors happy, too. Buoyed by rising sales.
Can You Trust Iron Mountain Inc’s 7.7% Yield? I keep a fair bit of paperwork in my office: bank records, tax returns, mortgage information, etc. Now picture the mountains of documents generated by a business like a law practice or.