If a stock offers a high dividend yield, it often signal trouble at the company. The dividend yield, after all, is calculated by dividing the annual dividend by the current price -- if the price collapses due to a fundamental weakness in the company's outlook, the dividend yield is going to shoot higher. In other words, just because a stock offers a high dividend yield doesn't mean that the company will have the resources to continue paying the dividend.
To protect you from such a scenario, we looked for dividend stocks that have significant cash flows relative to dividend per share estimates. Companies with low dividend payout ratios choose to retain most of their income, instead of paying it out as dividends. This income can then be reinvested into projects that will hopefully generate future growth, which will help the company increase future dividend payments.
Source: Motley Fool
Related Articles:
- 10 Higher Yield Dividend Stocks
- Who Owns The Top Dividend Stocks?
- Who Owns The Top Dividend Stocks?
- Top 10 Articles For 2010
- Dividend Stocks vs. a Safe Distribution Rate
________________________________________________________________
Subscribe to:
Post Comments (Atom)
0 comments
Post a Comment
Post a Comment
Note: Only a member of this blog may post a comment.