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.
Microsoft Corporation: The Best Tech Stock for Income Investors?
A Top Dividend Stock From an Unlikely Industry For the most part, the hottest tech stocks aren’t really known for their ability to produce dividends. But you might want to make an exception for Microsoft Corporation (NASDAQ:MSFT). In my opinion,.
3 Top Dividend Stocks with High Insider Ownership
These Stocks Yield Up to 7% You’d think twice about dining at a restaurant whose chefs chose to eat elsewhere, wouldn’t you? The same thing applies to investing in dividend stocks. After all, if a stock really presented such a.
Dynex Capital Inc: Lock in an 11% Yield by July 2
Dynex Capital: A Quality High-Yield Stock To most investors, Dynex Capital Inc (NYSE:DX) doesn’t sound like a familiar name. But the company offers one of the highest dividend yields in the current stock market. But investors wishing to lock in.
Omega Healthcare Investors Inc: Can You Count on This 8.3% Yielder?
OHI Stock is Making a Comeback The real estate business is known for producing a steady stream of rental income. But the stock prices of real estate companies are far from being stable. For instance, Omega Healthcare Investors Inc (NYSE:OHI).
An Easy Way to Tell If a Stock’s Dividend is Safe
Is The Dividend Safe? For income investors, dividend safety is of utmost importance. But determining whether a company’s payout is safe requires a lot of work. Usually, you’d have to go over its financial reports and see if it makes.
New Mountain Finance Corp: This 10.2% Yield Is Worth a Look
A High-Yield Stock Worth Mentioning For the most part, ultra-high yielders are known as risky bets. So when you see a stock with a yield north of 10%, it’s only natural to ask, “Is the payout safe?” Well, that’s what.
How to Earn 12%+ Yields Outside of the Stock Market
Earn Double-Digit Yields From the “Underground Stock Market” U2’s front man Bono ranks as one of the wealthiest musicians in the world, but the Irish pop star didn’t make much of his money selling records. Bono, in fact, accumulated most.
Starbucks Corporation: Forget the Bears, Own SBUX Stock for Dividends
Is the Latest Tumble in Starbucks Stock an Opportunity for Income Investors? Even with a serious pullback earlier this year, the U.S. stock market remains bloated. The Dow Jones Industrial Average, the S&P 500 Index, and the Nasdaq Composite are.
HEP Stock: An 8.8% Yielder with 54 Consecutive Dividend Increases
A High-Yield, Dividend Growth Stock You Likely Haven’t Considered Most people have never heard of Holly Energy Partners, L.P. (NYSE:HEP). And that was, in part, due to the stock not being a hot commodity. Since oil prices crashed in the.
Unilever NV: Slow and Steady Pays Off for This Dividend Stock
More Upside for Unilever NV We have become a nation of traders. People are constantly buying this and selling that. Each time, they’re hoping to hit the jackpot on some stock that doubles or triples in a short period of.
