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.
A Top Dividend Stock You Likely Haven’t Considered Betting on out-of-favor stocks can be risky. But if you are talking about the beaten-down shares of Tanger Factory Outlet Centers Inc. (NYSE:SKT), then even the most risk-averse income investor should take.
A Growing, Secure Payout From ECL Stock Another year in the books and one company just topped it off with a fat dividend increase for shareholders. As regular readers know, the mandate of our publication is to cover stocks that.
1 High-Yield Stock to Think About Generally speaking, high-yield stocks are not the safest bets. But for those who are willing to do the research, it’s still possible to find safe and rising income plays that also offer oversized payouts.
Finally, a Safe 7.5% Yield I don’t trust most high-yield stocks. In fact, I toss out most of the big payouts that cross my desk. Most companies just can’t offer both a high yield and a reasonable degree of dividend.
1 Monthly Dividend Stock to Think About If you want to find good deals this holiday season, forget the department stores. Instead, go to the stock market. Due to the lackluster performance of U.S. equities over the past few months,.
Buy Stocks for 80 Cents on the Dollar I love buying a buck for a quarter. Working is hard, but free money is nice. So when I see a real dollar selling for a discount, I get fired up. Of.
Stock Poised to Hike Payout I love bear markets. That might sound like an odd thing to say. After watching tens of thousands of dollars vanish from my brokerage accounts, most people wouldn’t be so chipper. But here’s the thing:.
A Double-Digit Yielder You Likely Haven’t Considered For the most part, stock market investors love the technology sector. While tech stocks were hit particularly hard during the latest market pullback, they are still some of the biggest gainers over the.
Stock Pays Out More and More Earlier this month, I told you about one of the biggest trends in the country: fifth generation mobile technology (“5G”). The switch promises to boost Internet speeds 100-fold from today’s levels. That could make.
Should Income Investors Consider Ford Stock? It’s no secret that down-and-out stocks can provide some of the biggest dividend yields. Still, you probably didn’t expect one of Detroit’s “Big Three” to offer a payout as high as seven percent. I’m.