Just about everybody loves a good dividend stock, whether you're an income investor or just looking for some guaranteed returns. It's even better when you can find businesses that pay solid dividends and can still grow fast enough to provide market-beating returns at the same time. While it's a difficult task to find those types of businesses, it's much easier to see dividend stocks that you should avoid. Here are two big name companies that dividend investors should be wary of.
The first company is none other than AT&T Inc. (NYSE: T). despite its historically strong dividend payout, AT&T's business isn't as lucrative as it once was, and holding AT&T simply for its dividend could burn investors. AT&T's cash flow hit a speed bump and was weak throughout 2014, and the company hopes that reining in its network spending will enable cash flow levels to rebound this year. AT&T isn't the only company facing big problems, which brings me to the next company investors would be wise to avoid, at least for now: Caterpillar Inc. (NYSE: CAT). The problem isn't with Caterpillar's current dividend yield of 3.4%; rather it's with the company's core business. Even management admits that 2015 isn't the year Caterpillar's business will rebound.
Source: Motley Fool
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I never really understood why so many dgi bloggers buy T - it's not really am outstanding candidate for growth is it?! The yield is so tempting though, as you say. If the yield remains that high, it's no wonder many people want to buy into the stock, as it's a welcome boost to their wealth, even if it's just for short term gain whilst they're looking for something else to invest in
Cheers
My assessment is that T is a great dividend stock. Specifically, a great dividend INCOME stock... and NOT a great dividend GROWTH stock. Ultimately, it is a good business worth owning and those who are ultra-long on the company and the stock are not as "unwise" as the article states.