Dividends4Life: 4 Safe Stocks With Dividend Yields Above 5%

4 Safe Stocks With Dividend Yields Above 5%

Posted by D4L | Tuesday, June 14, 2016 | | 0 comments »

Dividend stocks offer a bounty of advantages over non-dividend stocks, which makes them attractive long-term holds. The obvious difference is that dividends provide a hedge during a downturn. The average yield of the S&P 500 is just over 2%, and while that won't negate a stock market correction lower, it's better than nothing. The two more important advantages of dividend stocks are that they usually imply a healthy business model and they can be reinvested to supercharge your long-term gains. Companies typically won't pay a regular dividend to investors if they don't believe their business model is on solid footing. By a similar token, being able to reinvest your dividends over the long run can allow you to buy more shares of dividend paying stocks, which yields bigger payouts, and even more shares. This compounding pattern is what lends to rapid wealth creation.

The thing about dividends is that investors can be lured solely based on yield, which isn't necessarily a good thing. As investors, we want the highest yield imaginable so we can boost our reinvestment potential. But yields can rise because stock prices are falling. If investors aren't able to decipher whether a high yield is the result of a healthy shareholder return policy or a struggling business model, there could be problems. With this in mind, I figured we'd take a brief look at four safe stocks with healthy dividend yields north of 5%. By "safe," I mean companies with below-average volatility and proven business models that won't leave you sleepless at night: GlaxoSmithKline (NYSE:GSK), AT&T (NYSE:T), Corrections Corporation of America (NYSE:CXW) and HCP (NYSE:HCP).

Source: Motley Fool

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