Dividend Stocks
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.
13 High-Yield Stocks Paying Up to 35%
High-Yield Stocks You Can Count On for Retirement Income Every other day, I get a question in my mailbox that reads like this: “Where can I find some good high-yield stocks for retirement income right now?” I get the question.
FedEx Corporation: 84% Return Year-to-Date From a Dividend Stock?
A Low-Yield Stock with High Returns The main reason investors like reliable dividend stocks is that, over time, they tend to provide a steady stream of passive income to shareholders. But in the case of FedEx Corporation (NYSE:FDX), the company.
Huge Cash Windfall for Dunkin Brands Group Inc Shareholders
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Enbridge Inc: This 8% Yielder Could Pay Investors Even More
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Federal Realty Investment Trust: A Dividend King That Yields 4.7%
Still a Top Pick for Income Investors? I wrote about Federal Realty Investment Trust (NYSE:FRT) less than a month ago. But due to recent developments in both its stock price and underlying business, it’s worth revisiting the company. In my.
NextEra Energy Inc Displaces Exxon as Nation’s Largest Energy Company
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Ocean Yield ASA: Will This 9% Yielder Raise Its Dividend Again?
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This “Forever Asset” Keeps Beating the Market
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Target Corporation: 216% Return from a Once-Beaten-Down Dividend Stock?
How an Out-of-Favor Dividend Stock Delivered Oversized Returns “It may take a while for the company to execute its turnaround plan but, at the current valuation and dividend yield, TGT stock could be an opportunity.” That’s what I wrote about .
Can Williams Companies Inc Maintain its 8% Yield?
Is Williams Companies Inc’s 8% Yield Safe? It has been a rough go for oil-patch investors lately, but one partnership has fared better than others: Williams Companies Inc (NYSE:WMB). The COVID-19 pandemic has forced hundreds of energy companies to slash.
