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.
American International Group Inc Is a Top Dividend Stock
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FedEx Corporation Rewards Dividend Investors
FDX Stock Benefits from a Solid Business FedEx Corporation (NYSE:FDX) stock is a company that needs no introduction because of its presence around the world. Operating in an oligopoly, meaning there is very little competition, FedEx owns a large market.
Collect 4.9% Dividend Yield from Ford Motor Company
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Why Gilead Sciences, Inc. Can Bounce Back: A Delicious 3% Dividend Yield
Companies can often be the victims of their own success. Gilead Sciences, Inc. (NASDAQ:GILD) stock, for example, skyrocketed roughly 400% from 2012 to 2016 thanks to a quadrupling of revenues over the same time period. However, a recent string of.
Dividend Growth Investors Should Not Ignore Bank of America Corp
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Why Investors Should Still Consider Wells Fargo & Co
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Why Exxon Mobil Corporation Will Rebound for Income Investors
Nothing gets my attention quite like a large-cap dividend payer whose stock is slumping. Exxon Mobil Corporation (NYSE:XOM) stock, for instance, is down roughly 10% year-to-date and off about 15% from its 52-week highs. Now, that might not be such.
Why Income Investors Should Consider Citigroup Inc
Citigroup Is Trading at an Attractive Valuation Citigroup Inc (NYSE:C) stock is up 51% over the last year, outperforming all major U.S. indices and many individual stocks. With Citigroup’s excellent performance over the last year, it is time to stay.
Income Investors: The No. 1 Reason to Own Nike Stock
Why Income Investors Should Consider Nike Stock It’s no secret that consumer discretionary companies are not the safest bets in the stock market. However, income investors might want to make an exception for Nike Inc (NYSE:NKE) stock. Nike is the.
Starbucks Corporation is 1 Dividend Stock for the Next 10 Years
Growth and Income Investors Should Consider SBUX Stock Starbucks Corporation (NASDAQ:SBUX) stock is a very unique retail company that specializes in coffee and operates in more than 75 countries around the world. Now you may be wondering what makes Starbucks.
