Buying and holding dividend stocks is a proven way to build wealth over time. And dividend yield is one of the key metrics that investors use when deciding which dividend stocks to buy.
The dividend yield is a ratio of how much a company pays in dividends each year relative to its stock price. In general, the higher the yield, the better—but investors have to watch out for yield traps.
Yield traps can occur when a company offers a high-yield dividend that isn't sustainable based on its fundamentals.
One way to avoid a yield trap is to look for companies with a stable history of paying and, ideally, growing dividends.
High-yielding dividend stocks aren't likely to make a list of the best-performing stocks. Those slots are reserved for companies that offer more substantial growth. However, these high-yield dividend stocks frequently deliver a total return (stock price appreciation and dividend growth) on pace with the broader market.
However, like any investment, you want to make sure you're getting the best bang for your investment buck. The good news is that with just $1,000 of available capital, you can build a significant position in some high-yield dividend stocks.
In some ways, this special presentation will read like a greatest hits list—and there's nothing wrong with that. When you're looking for income, stability is paramount and that means there's something to be said for the familiar.
Click the "Continue to Slide #1" button to view the first company.
