A stock with a high yield doesn’t mean much if the dividend is cut or eliminated, and the stock price declines significantly. Sometimes it is desirable to accept higher risk for a higher yield. Other times we may be accepting higher risk and are not being adequately compensated for the additional risk. What can we do to help gauge the risk of an individual stock?
Risk is one of the key factors I look at. Risk can have as many definitions as the number of people you ask to define it. Ultimately, we are trying to access how likely is it that something bad will or will not happen. There are other factors that can affect the risk of an individual stock such as industry, geopolitical factors, technology, et. al. Needless to say, all these must be considered as we make our decision to buy or sell a stock.
Source: Dividends Value
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