2 High-Dividend Stocks and How to Trade Them

Dividend investing has always been a great strategy to ensure a steady income generation irrespective of a stock's price movement.

Dividend-paying companies are mostly stable, profit-earning companies and these stocks are especially popular among those in or nearing retirement.

Of course, who doesn’t like having a little extra cash on hand? In fact, owning dividend stocks can help ensure returns from two sources, income from dividends and from share price appreciation.

So, in basic terms, a dividend is a payment made by a company to its shareholders. Mostly the dividend is quarterly, with the board of directors deciding the exact timing of the dividend and the size, which is primarily determined based on the company’s earnings and cash position.

Types Of Dividends

Cash dividends: This is the most common way companies pay dividends. The cash is directly paid into the shareholder’s account.

Stock dividends: Companies pay investors additional shares of stock instead of distributing any cash.

Dividend reinvestment program (DRIP): In this program, investors can choose to reinvest dividends received back into the company’s stock, often at a discount.

Special dividends: A company might offer a special dividend, which is a non-recurring distribution.

Preferred dividends: Preferred stock is a type of stock that functions less like a stock and more like a bond. Dividends on preferred stock are generally fixed, unlike dividends on common stocks.

How Do Dividend Stocks Work?

So, to receive dividends on a stock, you simply need to own shares of the company, and the cash will automatically be deposited into your account when the dividend is paid. Typically, companies pay dividends to share the firm’s profits with its shareholders. Continue reading "2 High-Dividend Stocks and How to Trade Them"

Two Dividend Payers In Low-Risk Buy Zones

It’s been a solid month for the market, with the S&P 500 (SPY) up 6% in January and another 1% to start February. However, the real winners have been growth stocks, with the Russell 1000 Growth Index Fund (IWF) up 10% year-to-date.

This broad-based rally has made it more difficult to find names trading at deep discounts to fair value, but there are still a few names that continue to look attractive, especially if one is looking to battle-harden and diversify their portfolio with high yields.

Given the violent pullback in natural gas prices and some disappointing company-specific news this week, TC Energy (TRP) and National Fuel Gas Company (NFG) have found themselves sitting near 52-week lows, placing them in a relatively low-risk buy zone to start new positions. Let’s take a closer look below:

TC Energy (TRP)

TC Energy is one of the largest North American energy companies. It is best known as the owner of the Keystone XL Pipeline (~2,900 miles) that transports Canadian/US crude oil supplies across North America and the ANR Pipeline, one of the largest interstate natural gas pipeline systems (~9,200 miles) in the US.

The company was founded in 1951 and continues to have one of the best dividend track records among its peers, consistently paying and growing its dividend over the past 22 years, from $0.80 in FY2022 to $3.60 in FY2022.

Unfortunately, while it is a steady dividend and earnings grower that has continued to diversify with a focus on adding renewables over the past few years, it has had a rough past year from an inflationary standpoint.

This is evidenced by the company having to raise the cost estimate for its Coastal GasLink Project in Western Canada to ~$11.0 billion, impacting its FY2023 capital spending outlook, which has come after already reporting a doubling of the initial cost estimate to ~$7.0+ billion six months ago.

The continued cost increases can be attributed to construction delays due to COVID-19 disruptions and protests, combined with higher costs for materials. Continue reading "Two Dividend Payers In Low-Risk Buy Zones"

This High-Yield Stock Will Ensure Steady Profits In Your Portfolio

Daniel Cross - INO.com Contributor - Equities

There's a good reason that investors love high yielding dividend stocks. Not only does a dividend help buffer against downside risk, it also provides a steady base of returns over time that compounded, can add up to higher growth than you might expect.

Usually investors think of dividend paying stocks as large behemoths that simply don't have the ability to grow like it's smaller, younger competitors. It's a myth that's led many investors away from solid opportunities. These large entities might grow at a slower rate than you want, but when you factor in the dividends and the small downside risk these companies tend to have, you could find an investment that matches any high-risk small cap growth stock without having to expose yourself to unnecessary risk.

For a good example, all we need to do is look at Johnson & Johnson's (JNJ) stock.

Chart courtesy of StockCharts.com

If you bought 100 shares 10 years ago and reinvested all dividends, your holdings would have grown nearly 140%. And if you take a look at it's performance over that time, you'll see it's a very low-risk stock that was easily able to weather the 2008 financial crisis essentially making it a growth stock without the high growth risk. Continue reading "This High-Yield Stock Will Ensure Steady Profits In Your Portfolio"

The 12 Rules to Follow for Buying Dividend Stocks

Many of you have probably filled out one of the "retirement planner" forms available online. Plenty of tax and accounting programs also have "Lifetime Planner" sections for folks to determine if they can afford to retire.

These sorts of programs plug certain assumptions into a formula, such as projected inflation rate, retirement income, anticipated spending levels, and portfolio growth rate. After you add your personal information, it projects how much money you'll be able to produce annually during retirement, and how long it will last.

The first time I ran these numbers, the program said I was good until 116 years of age. At the time, I believed that if we followed the plan as outlined, my wife and I would never have any real money worries. We'd be set for the rest of our lives and could proudly leave some to our children to help with their retirement. How naïve of me! Continue reading "The 12 Rules to Follow for Buying Dividend Stocks"