Dividend, when combined with momentum, can offer an opportunity to step into challenging markets. A dividend is a distribution of a part of a company's earnings, decided by its board, to a class of its stockholders. It reflects part of a company’s net profits, and healthy dividend yields are directly proportional to attractive returns on investment in a stock. Thus, when a company decides to increase its dividend, it is a signal to investors that management is confident of the business’s prospects.
Momentum investors take short-term resort in stocks that are scaling up and tend to sell them as soon as they exhibit signs of a downtrend. Thus, choosing momentum stocks that also offer a decent dividend yield can be a good option for investors. While there is a debate regarding the criteria to focus on while choosing momentum stocks, the new Zacks style score system identifies some price movement metrics to come up with the best stocks in this regard: Northern Tier Energy LP (NTI), NVE Corp. (NVEC), General Motors Company (GM), Highwoods Properties Inc. (HW) and Crown Castle International Corp. (CCI).
Source: Zacks
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