But beware the siren call of high-yielding stocks. A high single-digit or low double-digit yield may look attractive at first glance, but yields that fat are rarely sustainable. Consider what a dividend yield is - the current annual dividend divided by the current stock price. A quarterly dividend check will provide little comfort if you invest in a stock that ends up plummeting.
Moreover, that dividend check is no guarantee. Companies are not required to make dividend payments like they are debt payments. If times get tough and money gets tight, checks to the bank and to bondholders will get sent out before your dividend check. It's not uncommon for high-yielding stocks to slash or suspend dividends indefinitely. One only needs to look at investors who picked up shares of General Motors or any of the "stable" bank stocks in 2008 because of their alluring yields to realize that juicy dividends often don't last.
Source: Zacks
Related Articles:
Dividend Growth Stocks News
- Stifel Has Big Second-Half Stock Market Concerns: 5 Defensive Value Dividend Stocks Buys - 24/7 Wall St. - 5/20/2025
- 3 European Dividend Stocks With Yields Up To 7.9% - Yahoo Finance - 5/19/2025
- Top Dividend Stocks To Consider In May 2025 - Yahoo Finance - 5/20/2025
- If I Could Only Buy 2 Dividend Stocks Right Now (May 2025 Edition) - Seeking Alpha - 5/20/2025
- 3 Global Dividend Stocks To Consider With Up To 5.8% Yield - simplywall.st - 5/20/2025
- Automatic Data Processing Inc. (ADP) Dividend Stock Analysis - 5/16/2025
- Air Products and Chemicals Inc. (APD) Dividend Stock Analysis - 5/9/2025
- Waste Management, Inc. (WM) Dividend Stock Analysis - 5/2/2025
- Wal-Mart Stores, Inc. (WMT) Dividend Stock Analysis - 4/25/2025
- Abbott Laboratories (ABT) Dividend Stock Analysis - 4/18/2025
How to Invest in Dividend Stocks
Posted by D4L | Tuesday, January 18, 2011 | ArticleLinks | 1 comments »________________________________________________________________
Subscribe to:
Post Comments (Atom)
Learned it the hard way with a stock that had a dividend of only 5%. I did not mind the stock kept plummeting as I comforted myself I still had the dividend. Not for long as they cut the distributions; cut like in zero, nada, zilch, nothing.
No wonder people invest in bonds. At least unless the company goes bankrupt they will pay it.
In hindsight I should have done the same.