Dividends4Life: Dabbling In Dividends

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Dabbling In Dividends

Posted by D4L | Wednesday, June 09, 2010 | | 0 comments »

Investors have long sought stocks with big dividends in troubled times. Now Swiss bank UBS offers up a palette of European companies which are offering above-market dividend yields but more importantly have "decent' dividend coverage in terms of earnings and free cash flow so there is less risk that the dividend will be cut.

Of course, investing in high-yielding stocks can be a double-edged sword. Sometimes stocks are yielding more than the market yield because investors believe the company faces serious challenges. In such a situation, there is a high risk that the dividend may be cut and, more ominously, the company may go out of business entirely so the original premise for investing--the idea that the big dividend cushions any capital loss--goes out the window.

Source: Forbes

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