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A Checklist of Dividend Investing Mistakes
The Highest Yielding Dividend Aristocrats
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High yield stocks are interesting because they give you more income right now.
Today we’re looking at 5 stocks with yields of 4% or more.
Some investors think that high-yield stocks are risky, low-quality companies, but they’re wrong.
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High-yield doesn’t always mean high risk.
Companies in the top 40% of dividend yields outperform the S&P 500 most often.
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Another misconception about high yield stocks?
That they only pay big dividends because they’ve stopped growing.
Again, not true.
Many of the best high-yield companies actually pay out less than half of their profits, keeping plenty of cash on hand to keep growing the business.
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When you have a growing company, and a high dividend yield, you can compound very quickly by reinvesting your dividends.
A High Yield Example.
Realty Income (O) runs a low-maintenance property model on a huge scale.
They own thousands of freestanding commercial properties under triple-net leases, which means the corporate tenants handle the taxes, insurance, and property maintenance.
All Realty Income does is collect the rent and pass it on to shareholders.
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Realty Income is known as ‘The Monthly Dividend Company’ because they pay a high dividend every single month.
If you would have invested $10,000 25 years ago, and reinvested your monthly checks, that position would be worth over $172,000 today.
Better yet, that initial ten grand would now be handing you over $9,000 in purely passive dividend income every single year.
That’s a 90% (!) yield-on-cost.