If you are a dividend investor, you can't just pick the stocks with the highest dividends. That may seem counterintuitive, but there is often a reason high dividend stocks appear so attractive. This can include problems in the underlying business, a dividend payout ratio that is much too high and threatens future growth, or a debt-to-equity ratio that makes investors believe the company can't survive. And that is just the beginning! Take a few moments to discover some things to consider when finding the highest dividend stocks for your investment portfolio ...
Like all things in life, dividend investing is rarely as simple as it sounds. Finding the highest dividend stocks can be fraught with danger because companies often have high dividend yields for a reason. Most commonly, it is the result of investors avoiding the shares, which can occur because they believe that the dividend is in danger of being cut or they think the business is in trouble and might not survive long-term. I explained some of the pitfalls facing investors who search for the highest dividend stocks in an article called Watch Out for the Dividend Trap - When High Dividend Yields and Low P/E Ratios Are an Illusion.
Source: About.com
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