Dividend yields and price-to-earnings multiples are often used as initial starting points when creating a portfolio. Because current market conditions are unstable, as everything from the price of oil to the valuation of the financial sector is constantly contradicted by prominent research reports, investing in cheap, high dividend-paying stocks may be an ideal approach until the future becomes clearer.
High dividend yields are typically achieved by investing in closed-end funds, real estate investment trusts, utility companies and royalty trusts, while pharmaceuticals and technology corporations, for example, usually pay only a modest dividend as they use most of their earnings to fund expansion. Yet, the pharmaceutical PDLI BioPharma maintains their dividend policy to yield 16.1%. Although this is largely due to the decreased share price resulting from continued revenue shrinkage, managements' refusal to cut dividends indicates their belief of prosperity in upcoming periods.
Source: Investopedia
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