Why dividend stocks are a good investment?

• 01 Mar, 2018
• By harrypa
• 1Comments
• 0
• Economy

Hi all,

today ill cover the topic of dividend stocks.

Dividend-paying stocks are attractive because they allow shareholders to profit directly when the company profits, and because dividend reinvestment has historically produced great wealth-building results over long periods of time. Dividends are still attached to equities, which makes them relatively riskier than bonds. Even companies with great track records of paying dividends can lose share value, cut dividend payments or go out of business. There is a difference between high dividends and safe dividends.

Simply looking at dividend yields and stock price appreciation is never a good way to pick an equity investment. There have been plenty of historical examples of large dividend yields spiraling out of control and getting ready to be cut. If you are convinced that you want to invest in single shares of dividend-paying stocks, do your homework on the company itself. Learn how to evaluate its financial health and future prospects. There are some companies that pay out dividends even when they operate at a short-term loss.

Another way to reduce the risk exposure with high-dividend yield stocks is to avoid putting your faith in a single company by using mutual funds. There are mutual funds centered around companies with high-dividend yields. As with any mutual fund investment, you might lose out on some upside capture if a company soars but it only makes up a small percentage of your portfolio.

Be wary of companies with high dividends but low retained earnings per share. It may vary from industry to industry. In general, companies must reinvest some profits to make sure that they can continue profitable operations in the future, and that is impossible if there are no retained earnings. You can find all of the information about revenue, net profits, dividends and retained earnings on a firm’s income statement and balance sheet.

There is no zero-risk, high-yielding investment. This is especially true with individual company shares, even those that have been around for a long time and have a history of high-yielding dividends.

If you want a list of stocks that gives Dividend Click Here!