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.
Federal Realty Investment Trust: A Dividend King That Yields 4.7%
Still a Top Pick for Income Investors? I wrote about Federal Realty Investment Trust (NYSE:FRT) less than a month ago. But due to recent developments in both its stock price and underlying business, it’s worth revisiting the company. In my.
NextEra Energy Inc Displaces Exxon as Nation’s Largest Energy Company
NextEra Energy Inc Has Quietly Overtaken Big Oil Move over Exxon Mobil Corporation (NYSE:XOM), there’s a new king of the energy sector: NextEra Energy Inc (NYSE:NEE). For decades, the Texas-based Exxon long reigned over the industry as its most valuable.
Ocean Yield ASA: Will This 9% Yielder Raise Its Dividend Again?
This High-Yield Stock Looks Interesting In financial markets, it’s generally the case that the higher the yield, the higher the risk. So it shouldn’t come as a surprise that, since the world economy tanked this year due to the COVID-19.
This “Forever Asset” Keeps Beating the Market
Norfolk Southern Corp. Is One Stock for the Next 100 Years While tech names have stampeded ahead in the past few years, the best-performing stocks have been some of America’s oldest: “Forever Assets.” Longtime readers have heard me use the.
Target Corporation: 216% Return from a Once-Beaten-Down Dividend Stock?
How an Out-of-Favor Dividend Stock Delivered Oversized Returns “It may take a while for the company to execute its turnaround plan but, at the current valuation and dividend yield, TGT stock could be an opportunity.” That’s what I wrote about .
Can Williams Companies Inc Maintain its 8% Yield?
Is Williams Companies Inc’s 8% Yield Safe? It has been a rough go for oil-patch investors lately, but one partnership has fared better than others: Williams Companies Inc (NYSE:WMB). The COVID-19 pandemic has forced hundreds of energy companies to slash.
Horizon Technology Finance Corp: Solid 10.3% Yielder with Monthly Payments
A High-Yield Finance Stock to Think About With today’s ultra-low interest rates, most income investors would be pretty happy to earn a dividend yield of five percent. After all, a 10-year U.S. government bond yields a measly 0.8%, while the.
Automatic Data Processing Inc Is a Recession-Proof Dividend Aristocrat
This Company Pays Reliable Dividends At first glance, Automatic Data Processing Inc (NASDAQ:ADP) doesn’t look like the typical recession-proof dividend stock. The company’s known for its payroll processing business, so when there’s a serious economic downturn and many workers are.
National CineMedia, Inc.: A $2.12 Stock That Yields 13.2%
A Speculative Play with Huge Cash Payouts? As a conservative income investor, I generally prefer blue-chip companies that pay increasing dividends over time. But because we’re in extraordinary times, some companies that risk-averse investors don’t normally consider might now be.
Intel Corporation: Is INTC Stock a Contrarian Income Opportunity?
Why Income Investors Should Not Ignore Intel Stock Mega-cap tech stocks have been some of the best performers this year, but Intel Corporation (NASDAQ:INTC) seems to have been left behind. Despite the company’s established position in the semiconductor chip industry,.
