Dividends4Life: High-Yield Dividend Stocks Worth Watching

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High-Yield Dividend Stocks Worth Watching

Posted by D4L | Thursday, July 21, 2011 | | 0 comments »

As uncertainty has reared its ugly head, I've started to become more and more interested in dividend stocks. Stocks certainly have problems, but they're preferable to bonds because of today's historically low interest rates. It's hard to beat guaranteed returns in the form of cash dividend payments. What's more, companies can raise their dividend payouts from year to year unlike bonds, which have fixed coupon payments. This is a double-whammy -- stocks have the potential to pay more than bonds and to grow those payments.

Health care and consumer staples companies make excellent dividend payers and generally belong to the low-yield, high-growth side. I'd like to examine the other side of the spectrum today. The part of the market that's chock-full of high-yield, low-growth companies is the telecommunications services sector. Telecommunications companies often pay out fat dividends, but they also come with their own unique sets of problems. They require plenty of capital investment, are usually mature, slow-growing businesses, and are often burdened with a lot of debt.

Source: Motley Fool

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