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.
Nike Inc (NYSE:NKE): Prepare for Another Dividend Increase
Will Nike Stock Raise Its Dividend Soon? With a 1.3% yield, Nike Inc (NYSE:NKE) may not look like an attractive dividend stock. However, the company deserves income investors’ attention for a very simple reason: the ability to grow its payout..
Why Investors Shouldn’t Skip Over This Unique Group of Stocks
These Companies Deserve Income Investors’ Attention Regular readers of Income Investors would know that I profile a lot of high-yield stocks. Some I find worth considering, others not so much. Today, however, I want to talk about a group of.
Energy Transfer Partners LP (NYSE:ETP) Stock: This 13.5% Dividend Yield Is No Joke
Earn a Double-Digit Yield That’s Still Growing If you just randomly pick a stock with a double-digit yield, chances are you won’t want to own it. This is because an ultra-high yield could simply be a byproduct of investors’ concerns.
The Simple Way to Beat the Market, Decade After Decade
Simple System Increases Returns 277% Most people love complex investment strategies. They think you have to reinvent the wheel to make big money. Give them something simple and they’ll roll their eyes. They’re wrong. Investing in stocks that “put shareholders.
DDR Corp: Check Out This 9.4% Yielder in the Bargain Bin
This Ultra-High Dividend Yield is Actually Worth Considering If you are chasing the hottest tickers, chances are you won’t find many high-yield stocks. The reason is simple: a company’s dividend yield moves inversely to its price. As share prices rise,.
This Ignored Dividend Stock Has Increased Payments 986%
1 Dividend Stock to Own Forever As I’ve said over and over, one of the good things about dividend stocks is that they’re predictable. Take Automatic Data Processing (NASDAQ:ADP), for example. In a column last month, my colleague Jing Pan .
Getting a Quarterly Raise…in Retirement?
The Best Retirement Income Solution? In the workplace, you’d be considered lucky if you are getting annual pay raises. But once you retire, the payroll checks would stop coming in. And that’s why today’s top pick is special. This investment.
WMT Stock: Time to Bail on This Dividend Aristocrat?
Here’s Why You Shouldn’t Give Up on Wal-Mart Stores Inc There’s no denying that the e-commerce industry is firing on all cylinders. According to market research firm eMarketer, worldwide retail e-commerce sales is on track to grow 23.2% this year.
Earn 7.4% Income for Life
Little-Known Income Stream Yields 7% Before we get into this piece, I have to tell you: this might be one of the most boring niches in the market. You probably won’t be bragging about this investment around the office water.
The Most Overlooked Aspect of Dividend Investing
The Secret to Ever-Increasing Dividends? Earlier this year, I wrote a piece on why it’s important for income investors to focus on companies that can generate a recurring business. It’s one of the most important things to check when shopping.
