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.
Eagle Point Credit: This 13.2% Yield Looks Interesting
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Fear Rising Interest Rates? Consider This 14% Income Stream
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This Company’s 7% Dividend Yield Could Easily Become 14% in the Future
A Top Dividend Growth Stock to Consider Today’s chart highlights one of my favorite stocks in the energy sector, Spectra Energy Partners, LP (NYSE:SEP). Unless you have been living under a rock, you’ll have noticed the massive downturn in oil.
Unique Real Estate Company Paying Investors 16.2% in Cash Dividends
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Medical Properties Trust Inc.: Growing Business Yields 7.8%
The Biggest Dividend Story in America Today’s chart shows a booming industry from an aging America. Regular readers know we are always looking for big secular trends to invest in. As more baby boomers hit retirement age, analysts project demand.
Hasbro, Inc. (NASDAQ:HAS) Increases Dividend, Shares Soar
Hasbro, Inc. Has Good News for Income Investors Shareholders of toymaker Hasbro, Inc. (NASDAQ:HAS) haven’t had the best of luck over the last several months. Because of the bankruptcy filing of major toy retailer Toys R Us Inc, Hasbro has.
Humana Inc Reports Earnings Growth and Raises Dividend by 25%
HUM Stock Returning Cash to Investors With a yield of less than one percent, Humana Inc (NYSE:HUM) may not be on the radar of most dividend investors. But given the company’s impressive dividend growth, HUM stock deserves more attention. On.
Gilead Sciences, Inc. Raises Dividend by 10%
GILD Stock Returning Cash to Investors Biotech stocks aren’t exactly known for their dividend growth, but Gilead Sciences, Inc. (NASDAQ:GILD) has been an exception. After the closing bell on Tuesday February 6, Gilead Sciences announced that its Board of Directors.
Dividend Aristocrat Archer Daniels Midland Co Hikes Payout Again
ADM Stock Reports Earnings and Raises Dividend Most people have never heard of Archer Daniels Midland Co (NYSE:ADM). But when it comes to returning cash to investors, few companies can match the track record this Chicago-based agricultural processor. On Tuesday,.
This 9.1% Yielder Raises Its Payout Every Three Months
A Top Pick for Yield-Seeking Investors Today’s article highlights a generous dividend-payer that most people have never heard of. I’m talking about Enviva Partners LP (NYSE:EVA), a master limited partnership (MLP) headquartered in Bethesda, Maryland. We have profiled dozens of.
