Companies pay dividends from free cash flow, the money left over after expenses and fixed asset purchases. If a company offering a high yield pays out more than its free cash flow (often by taking on debt), it depletes its value. This means the stock will probably lose value in the long run; a 7% yield doesn't look as good if the stock loses 10% of its value. Some funds offer incredible yields, sometimes 10% or more. Have you wondered how they do this? It is because they are leveraged -- they buy securities and then borrow against them to purchase more. This is incredibly risky if the market goes south. What's an investor to do? I recommend focusing on dividend growth and business strength. Here's how it works over time.
Texas Instruments (TXN) is an incredible example of dividend growth in action. The company leads the analog semiconductor industry, selling mainly to the industrial and automotive sectors. Home improvement is a resilient industry. People spend to fix up their homes for sale and to make their new place their own when housing is hot. When housing is tight, folks buy goods to improve their current space. Either way, Lowe's (LOW) can thrive. This is one reason the company has paid a quarterly dividend since 1961 and increased the payout each of the last 25 years. If you still aren't ready to sacrifice yield, Vici Properties (VICI) offers both a juicy 5% yield and an increase in each year of its short five-year history.
Source: Motley Fool
Related Articles:
Dividend Growth Stocks News
- 10 Magnificent S&P 500 Dividend Stocks Down Over 10% to Buy and Hold Forever - Nasdaq - 7/20/2025
- 3 Dividend Stocks to Hold for the Next 10 Years - MSN - 7/20/2025
- Seeking Up to 15% Dividend Yield? Piper Sandler Suggests 2 Dividend Stocks to Buy - TipRanks - 7/20/2025
- The Role of Global Trade in Stock Market Best Performing Dividend Stocks - High-yield investments - PrintWeekIndia - 7/20/2025
- Best Start Up Stocks Best Performing Dividend Stocks - Superior portfolio returns - PrintWeekIndia - 7/20/2025
- Chevron Corporation (CVX) Dividend Stock Analysis - 7/18/2025
- Emerson Electric Co. (EMR) Dividend Stock Analysis - 7/11/2025
- Amgen, Inc. (AMGN) Dividend Stock Analysis - 6/27/2025
- W.W. Grainger, Inc. (GWW) Dividend Stock Analysis - 6/20/2025
- Abbvie Inc. (ABBV) Dividend Stock Analysis - 6/13/2025
If You Like Dividends, You Should Love These 3 Stocks
Posted by D4L | Friday, August 04, 2023 | ArticleLinks | 0 comments »________________________________________________________________
Subscribe to:
Post Comments (Atom)
0 comments
Post a Comment
Post a Comment
Note: Only a member of this blog may post a comment.