Learn about the benefits and risks of investing in dividend stocks and ETFs that can earn you passive income.
Updated Aug 29, 2023
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Dividend stocks are a type of investment that rewards shareholders with regular payouts, called dividends. These dividends are a portion of the company's earnings and are distributed to shareholders on a regular basis. Essentially, it's like getting a bonus just for holding onto a stock.
Not all stocks pay dividends, but those that do can be a great choice for income investors. The best dividend stocks offer a reliable stream of income and support continued dividend growth.
Dividend-paying stocks have historically outperformed non-dividend-paying stocks, with dividend-paying stocks in the S&P 500 outperforming non-dividend-paying stocks by an average of 1.9% per year from 1972 to 2019.
But which dividend stocks should you invest in? Well, in this article, we'll talk about the best dividend stocks to invest in and the investments worth considering.
Dividend stocks, which pay out regular dividends to shareholders, can be some of the most reliable assets and a top choice for conservative investors who value stable cash flow and steady growth.
It's like a marriage that's stood the test of time, dating all the way back to the 17th century. Paying out dividends has been a common practice among publicly traded companies worldwide ever since, and investors seeking a reliable source of passive income just can't get enough.
If you're ready to commit to creating a portfolio of these babies, you'll want to choose companies that pay reliable dividends and diversify across industries and market caps. Think of it as building a harem of reliable and diverse partners.
And for you income investors out there, dividend stocks are like the lovechild of income and growth potential—they offer both a regular source of cash flow that can add up over time and the potential for capital appreciation. It's the best of both worlds.
So, make sure to pick the most reliable dividend stocks with a good track record and the potential for continued dividend growth. Diversify your investments across different industries and market caps, and pay attention to factors like the company's revenue growth, dividend yield, and payout ratio.
Low-risk predictable returns
Make money without selling
Compounding returns with dividend reinvestment
Stock price can go down
Dividend yield can fluctuate
Dividends are usually quarterly
Those looking for the cream of the crop dividend aristocrats should check out these companies that have consistently paid out high dividends for half a century or more.
Investing in dividend stocks can be a great way for income investors to generate a reliable stream of cash flow and potentially grow their wealth over time. When considering dividend stocks to invest in, there are several types to choose from, including blue-chip stocks, dividend growth stocks, high-yield dividend stocks, preferred stocks, and dividend ETFs.
To identify the most reliable dividend stocks, investors must research and consider factors such as dividend yield, payout ratio, dividend growth rate, and the company's financial health.
Ultimately, the type of dividend stocks to invest in will depend on the individual investor's risk tolerance and financial goals. So, whether you're a novice or a seasoned investor, exploring the world of dividend stocks can be a valuable addition to your investment portfolio.
According to Zacks, Pioneer Natural Resources is a dividend aristocrat with a coveted A Growth Score—like an A+ on your high school report card. This means the company has strong growth potential and is a reliable choice for conservative income investors looking for reliable dividend stocks.
PXD has a long history of dividend increases and dividend growth rate so you can trust that the company will support continued dividend growth. Plus, with its steady cash flow and strong balance sheet, you can rest assured that PXD is one of the most reliable dividend stocks out there.
Investing in PXD is like having a dependable friend who always comes through. Whether it's for income or growth, PXD has got you covered. So go ahead, treat yourself to that fancy latte, and invest in PXD for the long haul. Who knows, you might even become one of the patient investors who enjoy the price appreciation of this high-yielding stock.
Altria Group Inc. isn't just a one-trick pony. They're a diversified tobacco company expanding into new markets like wine and beer, making them a reliable option for those with a lower risk tolerance. With a strong brand portfolio that includes iconic names like Marlboro and Black & Mild, they've got a competitive edge (and a captive consumer base) that keeps them ahead of the game.
Investing in Altria Group Inc. is like investing in a best friend who's got it all together (but smokes a pack a day, to your chagrin). They've got a solid dividend history, a reliable dividend growth rate, and a steady cash flow that supports continued dividend growth. And for all you conservative investors out there, they've even got a conservative payout ratio.
Altria Group Inc. has a track record of nearly half a century of paying higher dividends, and their steady growth is like a breath of fresh air in today's volatile market. Sit back, relax, and take a puff of those sweet dividend returns. Your portfolio will thank you later.
Extra Storage Space is technically a real estate investment trust or REIT. That means that, in addition to that juicy annual dividend, investors are entitled to a majority of realty income. EXT is one of the best REITs to invest in because when they sell a property, the earnings go back to investors.
Extra Space Storage Inc. has been consistently increasing its dividend for the past 10 years, with a tasty 10.2% annual growth rate over the past five years. That's the kind of dividend history that'll make any income investor drool.
Why should you invest in Extra Space Storage Inc? Well, it has stable earnings and strong industry fundamentals. Plus, with the popularity of the KonMari method and tiny homes, people are learning to declutter, but they'll always need a place to stash their stuff. And with a solid dividend track record, you can support continued dividend growth while earning a little extra cash.
But here's the thing that really sets V.F. Corporation apart: they're not putting all their eggs in one basket. They've got a diverse portfolio of brands, so they're not just relying on one product to keep the money flowing. Have you heard of The North Face or Vans? Those are just a couple of their big hitters.
For all you income investors out there, this company is a reliable dividend stock with a solid dividend track record. They're even considered a dividend aristocrat with consecutive dividend increases to support continued dividend growth. Plus, with their strong financial position, steady cash flow, and predictable cash flow, you can trust that they'll keep paying out those sweet dividends.
If you're looking for a company with a history of steady growth and an average dividend yield, V.F. Corporation is a great choice for conservative investors with a low-risk tolerance. With their natural gas liquids and fossil fuels, they're not just keeping up with the broader market, they're leading the pack. And with a payout ratio that's well within the conservative range, you can trust that they'll keep the dividends coming.
But, what really sets them apart from the rest is their massive dividend yield. At 8.19%, it's higher than a giraffe's neck and most other energy companies out there.
Why is Devon Energy Corporation such a great option for income investors looking for reliable dividend stocks? Well, this company has a solid track record of supporting continued dividend growth. They're committed to returning value to their shareholders through smart investments that support steady cash flow and natural gas liquids. And let's not forget their nearly half a century of dividend history.
Devon Energy Corporation is a company that pays dividends like clockwork. Their high dividend yield is the cherry on top of an already delicious sundae. Just make sure to do your research and consider your risk tolerance before investing. But hey, with a credit rating as good as theirs, you can rest easy.
AT&T Inc is one of the best dividend stocks out there. With a generous dividend yield of 5.71%, you can sit back, relax, and watch the cash roll in.
But don't worry, this isn't some sketchy operation. AT&T Inc has been around since 1885 and has a long track record of paying dividends. In fact, they're one of the most reliable dividend stocks out there. You can trust that they'll continue to support their continued dividend growth for years to come.
So if you're an income-seeking investor with a taste for excitement, AT&T Inc is the perfect addition to your portfolio. With its history, market cap, and impressive dividend yield, it's a no-brainer. It's like having a money tree in your portfolio, without all the fuss of watering and pruning. Don't miss out on this opportunity to make some serious cash.
That's right, PMI knows how to pay those dividends like it's their job (because it is). And they've been doing it for a while now, with a history of increasing those payouts year after year.
Everyone knows smoking is bad for you, but let's ignore that for a second. PMI is a global player with a footprint in over 180 countries, and they're damn good at what they do. Their stability in the cigarette market means a steady stream of revenue, which means they can support continued dividend growth for their shareholders.
So, if you're a fan of dividend-paying stocks or consider yourself an income investor, give PMI a try. They aren’t the cure for cancer, but their highly addictive products are sure to make investors happy. Who doesn't love a reliable dividend stock with a solid track record of consecutive dividend increases?
PMI is like the dividend aristocrat of the tobacco world with nearly a half-century history of dividend growth. So go ahead and light up some profits with PM.
But that's not all—one of the coolest things about Dow Inc. is its long-standing history of paying dividends and increasing them. They're like that trusty friend who always comes through for you. And with a presence in over 160 countries, DOW has a stable source of revenue that supports its ability to pay dividends. They're like that friend who always has your back—financially speaking.
And if you're a socially conscious investor, DOW might just be the perfect match for you. Their portfolio includes products and technologies that contribute to sustainable solutions. They're like the superhero who saves the planet while earning you some dough.
Oh, and did we mention that Dow Inc. is committed to returning value to shareholders by repurchasing shares of its common stock? They're like the smart friend who knows how to make the most out of their investment.
All in all, Dow Inc.'s strong financial position, commitment to sustainability, and history of paying and increasing dividends make it an attractive option for income investors. So if you're looking for a company that's financially stable and socially responsible, DOW is definitely worth considering. And with a dividend yield like that, you might just be able to treat yourself to some natural gas liquids or even a real estate investment trust.
By choosing to invest in high dividend stocks, conservative investors ones can generate a steady and reliable cash flow. This is due to the payout ratio typically associated with high-yield dividend stocks. These companies with an upper hand in the market and an impressive financial health have cemented themselves as dividend aristocrats having an unbeaten track record of almost five decades or more of paying dividends.
These established companies have a comfortable payout ratio and a consistent history of raising their annual dividend, considerably contributing to their long-standing stay in the industry. They also boast robust cash flow and balance sheets which endorse their potential for annual dividend growth.
Including stocks with the highest dividend yield in your portfolio can be a smart move that ensures that your investments pay you. With a strong balance sheet and steady cash flow, high-yield dividend stocks are capable of paying dividends and incrementally multiplying them every year. Furthermore, shares trading in these segments could offer an increased payout ratio, indicating a potential rise in dividend sum in the future.
However, no investment journey is devoid of risks. There’s always the chance a company cuts the dividend yields short, terminates dividend payments altogether, or experiences a drop in the stock price.
But these risks can be alleviated by diversifying your portfolio with a mix of dividend-paying and non-dividend-paying stocks with exposure to diverse industries like natural gas, oil, or transportation. Other tools such as mutual funds and high-dividend ETFs can be ways to diversify away from commodities and brace for market fluctuation.
Investing in high-yield dividend stocks can be a valuable addition to the portfolio of income investors, providing a reliable source of income and potential for price appreciation. Through smart investments in stocks that share an annual dividend, have a firm track record, and a solid growth rate, patient investors can strike gold.
Dividend stocks are like the dependable old boots in your investment wardrobe—they may not be the flashiest option around, but they've got your back through thick and thin.
Whether it’s Pioneer Natural Resources Co, Altria Group Inc., and V.F Corporation with their robust and dependable heritage of dividend payments, or the hearty yield from Devon Energy Corporation and Philip Morris International Inc., dividends are worth a second look.
Stay woke, stay informed, and look beyond just the highest dividend yield. Remember, a strong balance sheet, a considerable market cap, and a well-crafted payout ratio that doesn't leave the company gasping for cash are the marks of healthy dividend stock.
In the age of risky Bitcoin bets and flashy tech unicorns, going classic with dividends might feel a bit old fashioned. But hey, who ever complained about consistent, reliable returns slyly stacking up their net worth, one dividend cheque at a time, right?
Investing in dividend stocks might not make you the talk of your next cocktail party—but while others are busy chasing pipe dreams and pie-in-the-sky growth stories, you’ll be steaming ahead slow and steady, cruising your way to a richer financial tomorrow one dividend at a time.
So bring out your monocles and unleash your inner Sherlock because the game, dear investors, is on. There’s a bonanza of dividend yields waiting to be unearthed. As the saying goes, more money, fewer problems—or something like that.
High-profile companies such as Pioneer Natural Resources Co, Altria Group Inc, Extra Space Storage Inc, V.F. Corporation, Devon Energy Corporation, AT&T Inc, Philip Morris International Inc, and Dow Inc, are championed as the best high-yield dividend stocks for 2023. They have a legacy of serving up sustained generous dividend payouts to their investors for several years.
But stay sharp, dividend chaser. It's cardinal to consider key factors such as dividend yield, payout ratio, dividend growth rate, and—without mincing words—the overall financial health of the company. Funneling these metrics through the sieve of detailed research will help you identify the real McCoy from the glossy imposters. Result? A potent alchemy enabling you to meet your financial goals founded on your level of risk tolerance.
And for the quants out there, chew on this—dividend-paying stocks in the S&P 500 have outperformed their stingy counterparts by an average of 1.9% per year from 1972 to 2019. Talk about the potency of the dividend elixir.
Now, like any spell, there are counter forces to be wary of. Risks lurk in hidden corners—the company you invested in might suddenly reduce or cease dividend payments, or the stock price could decline. Quite the horror story, right? Fear not. By investing wisely and managing your portfolio, you're setting the stage for a precious but steady income, and potential price appreciation over time.
And for all you conservative strategists out there, blending dividend-paying with non-dividend-paying stocks plus a sprinkle of diversified assets like real estate and eSports companies or transportation firms might mitigate risk and soften potential market fluctuations.
In essence, dividend stocks are like the philosopher's stone to the modern alchemist—rewarding the patient with potential low-risk, predictable returns, and the enticing possibility of compound returns with dividend reinvestment. It's like living in a castle that generates its well of gold.
By granting you the power to rake in returns without selling off assets, dividend stocks make a compelling case for themselves in the grand narrative of investing, helping you pave your way to a brighter, richer, and financially secure golden era. What's the prediction on the crystal ball? Your future self, nodding their head in approval.
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