When a company makes a profit, it can distribute some of these funds as dividend payments. Dividend payments are one of three actions a company can take with its profits to benefit a shareholder; the other two include share repurchase programs and re-investing the funds in the company. When interest rates are low, many investors look to dividend payments for a source of income. When considering a dividend yielding stocks, take note of the company’s ability to pay out dividends over a long period of time.
When it comes to the stock market, there are three ways a profitable, publicly traded company can reward its investors: 1) pay a dividend; 2) initiate a share buyback plan; or 3) invest it back into the company. All three of these are aimed at building shareholder wealth, though some are more popular than others. 1. Dividends Investors looking for capital gains and an income stream in today’s economic climate can’t go wrong with fundamentally strong companies with a good history of paying out quarterly or monthly dividends. In light of low interest rates, many dividend-yielding stocks outperform the historical avenues for investment income. Most banks begrudgingly doll out just 0.5% ... Read More
Most investors will consider utility stocks in saving for retirement, or when looking for regular stock market income while in retirement. This is a group that has a better track record on the stock market than you might think. Old economy stocks can still generate solid investment returns, even if they are well-established utilities. The Dow Jones Utility Average has a good long-term track record of wealth creation, but it has not been without volatility. Clearly this is a group that is less volatile than many other stock market sectors and these stocks experience waves of enthusiasm from institutional investors. Utility stocks are not for everyone. A lot of investors feel that they would be better off in f ... Read More