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.
Looking for High-Yield Stocks? Read This In today’s ultra-low interest rate environment, a yield of 12% simply seems too good to be true. But what if management of this 12% yielder is willing to put their money where their mouth.
This Dividend Stock Just Doubled Its Payout In today’s market, few things cheer up investors more than a sizable dividend increase. At the end of the day, stock prices will always fluctuate, but dividends are cash returns that investors get.
A High-Yield Stock to Think About Over the past two months, oil prices have been making a steady recovery. Does that mean it’s okay to chase high-yield stocks in the energy sector? Well, let’s not forget that, although energy investors.
Looking for High-Yield Stocks? Read This Chasing high-yield stocks in an uncertain market environment can seem like a risky endeavor. But investors of Enviva Partners LP (NYSE:EVA) shouldn’t have any problem sleeping well at night, even though they own an.
Looking for Returns in This Shaky Market? These Dividend Growth Stocks Could Help For most of the past decade, a few percent of dividend yield did not seem like much. That’s because markets were steadily climbing. But when markets start.
Don’t Bail on This Dividend Stock Whether you are an income investor or growth investor, if you want to own stocks rather than trade them in today’s market environment, Kimberly Clark Corp (NYSE:KMB) deserves your attention. I know, with fresh.
Looking for High-Yield Stocks? This One Could Be Special High-yield stocks are usually not the safest bets. And if markets were to tumble, causing dividend yields to rise, investors should be even more cautious. If you want to earn a.
Closed-End Fund Trades at a 10% Discount Who wouldn’t buy a dollar bill for $0.80? Of course, such deals don’t crop up in the stock market often. If an opportunity like that arises, investors jump in quickly to bid up.
Fidus Investment Corp: A High-Yield Stock to Think About Remember a few months ago when it was hard to find high-yield stocks? Well, with the market downturn, the drop in dividend-paying companies’ share prices has lifted their yields up—in some.
These Dividend Stocks Pay Reliable Income The bottom has fallen out of dividend stocks in recent days, but you already knew that. Why they’ve plunged is important. Analysts fear that a second wave of COVID-19 will lock down the global.