8 Dividend Stocks That Look Too Generous

With interest rates near zero, many investors are turning to dividend stocks for income. And for some investors, the higher the yield, the better. But it’s important to remember that in the equity market, just as in the bond market, higher yield usually means higher risk. The biggest risk is a dividend cut, which usually provides the proverbial double whammy. It’s not just a reduced dividend that can cause problems. Cash returned to shareholders can’t be used to invest behind the business or pay down debt. For some firms, then, a focus on growing or even maintaining a dividend can have a deleterious impact on growth.

The broad point is that an investor shouldn’t be choosing a stock for its dividend alone. Nor should they see the payout as “free money.” Dividend stocks have their use, but a high dividend on its own doesn’t make a bull case. In fact, for some firms, the dividend can create risks of its own, as is the case for these eight dividend stocks: Walgreens Boots Alliance (NASDAQ:WBA), Kraft Heinz (NASDAQ:KHC), Archrock (NYSE:AROC), Enbridge (NYSE:ENB), Interpublic Group of Companies (NYSE:IPG), Newell Brands (NASDAQ:NWL), Xerox (NYSE:XRX) and Altria (NYSE:MO).

Source: InvestorPlace

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