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.
BAC Stock: Is It Time to Take Profits on Bank of America Corp?
Any More Upside for BAC Stock? Our Income Investors readers are up 40% in two months. And it’s not from some option or junior miner, either. It’s from blue-chip Bank of America Corp (NYSE:BAC) stock. Shares are surging to new.
Mastercard Inc: 3 Reasons Why Investors Shouldn’t Ignore MA Stock
MA Stock Continues to Reward Shareholders Mastercard Inc (NYSE:MA) stock is a unique financial services company located in the U.S. but with a global presence. MasterCard is a company that should not ignored by income investors. Operating in a favorable.
Las Vegas Sands Corp.: 3 Reasons to Be Bullish on LVS Stock
LVS Stock Benefits From Strong Management Las Vegas Sands Corp. (NYSE:LVS) stock is a company that operates casinos in the U.S. and overseas. The company has a lot going for it, making LVS stock a potential missed opportunity. It is.
Disney Stock: 2017 Could Be a Huge Year for Walt Disney Co
Will Disney Stock Surge in 2017? After being in the doldrums for the most part of 2016, Walt Disney Co (NYSE:DIS) stock has finally started climbing. In the past three months, it has surged an impressive 18.4%. But this could.
5 Top Dividend Growth Stocks for 2017
Dividend Growth Stocks List A major concern for any investor is the cost of inflation, which can greatly affect your bottom line. Many investors tend to forget about inflation when making important investment decisions. Over the long term, this could.
CNI Stock: A Forever Asset Yielding 5.3%
1 Dividend Stock to Own Forever Canadian National Railway Company (NYSE:CNI) stock is the ultimate “Forever Asset.” The firm gushes cash flow. Right now, investors are collecting a total shareholder yield of over five percent. And I’m not the only.
Citigroup Inc: Can Citigroup Stock Reward Shareholders?
Upside for Citigroup Stock? Citigroup Inc (NYSE:C) is one of the largest money center banks in the U.S. The company behind C stock has global operations, serving customers around the world. When it comes to companies you’re considering investing into,.
5 Cheap Dividend Stocks for 2017
Cheap Dividend Growth Stocks There is no other way to put it: today’s stock market is bloated. In 2016, all three major indices of the U.S. stock market surpassed their all-time highs. This makes it extremely difficult for dividend investors.
Boeing Co: Why BA Stock is Worth Owning
2 Reasons to Be Bullish on BA Stock Boeing Co (NYSE:BA) is a company that should not be ignored by income and growth investors. Before making an investment, a few things should be kept in mind, including the company’s history.
Nike Stock: Time to Bail on Nike Inc?
Is NKE Stock Still Worth Owning? 2016 was a tremendous year for the U.S. stock market, with all three major indices surpassing their all-time highs. But there were still companies that lagged behind, such as Nike Inc (NYSE:NKE) stock. In.
