Have you ever heard of high yield monthly dividend stocks? If you know anything about stocks then you have almost certainly heard about dividends. Basically, dividends are cash payments that companies give to their shareholders. In a sense, a dividend can be thought of as profit sharing. In some cases, however, some companies will even give out dividends when there are no profits.
Investors love dividends because they generate increased income. Not only can investors make money off of the increase in stock prices, but they can also make money off of the dividends. Thus they provide savvy investors with two different streams of income for their stocks. The best dividend stocks are those stocks that will both increase in value and offer a good dividend yield. Popular dividend stocks include Apple, Goldman Sachs, McDonald’s, American Express and Walmart. These stocks are among the best dividend paying stocks. They often make the short list when it comes to top dividend stocks, so make sure you check them out. Of course, there are many other great options out there.
Many dividend stocks are older companies. Quite simply, dividends used to be more common but now many newer companies do not offer them. There are some notable examples such as Apple. However, even this famed tech giant only recently started to offer dividends. They did only after a lot of pressure was put on the company to share its huge cash pile. Many other tech companies, like Google, do not offer a dividend. Rumors though are circulating that the company might some day offer one. If so, you can expect share prices to jump as investors look to cash in on the dividends.
Many top-notch investors, such as Warren Buffet, love high dividend stocks. They are a great option for just about any portfolio. These stocks can be especially good for people who are trying to live on a fixed income or off of their investment wealth because they provide regular, stable income. High dividend stocks can provide investors with reliable income that isn’t dependent just on share prices. For retirees, this income can be essential for maintaining their financial well-being.
The Best Way to Invest in High Dividend Stocks
By now you should be able to answer the question “what are dividends”. However, you might still be figuring out the best way to invest in the highest dividend stocks. One thing we recommend is not investing in companies solely because they provide dividends. For example, let’s say you want to invest in Walmart because they provide a dividend, but at the same time you doubt Walmart’s long-term competitiveness. Maybe you’re worried about Amazon, or perhaps you fear that labor prices will continue to increase for the big box retailer. If you don’t believe that Walmart would be a good investment without a dividend you probably shouldn’t invest in the company. Why? Because if share prices decline they could quickly outweigh the gains from dividends.
Highest Dividend Stocks
The highest dividend stocks often are not household names. In this case we’re talking about the actual yield of the dividend, not how the stock will perform overall. Stocks like Kayne Anderson Midstream Energy Fund, Inc (KMF), Linn Energy, LLC (LINE), and Atlas Resource Partners, L.P. (ARP) can provide dividend yields in excess of 30 percent. Many of these stocks are closely owned by a few shareholders, or else trying to drum up interest and funding, and so they offer high dividends. If a company is owned by a small number of people, these investors might want to reward themselves with dividends. If a company is in need of cash, sometimes giving money away is a good idea because it can attract investors.
Also, if something sounds too good to be true, you should be careful. If dividends are absurdly high there is most likely a reason for it and that reason might not be good. Many of the stocks mentioned above, for example, are energy stocks and right now the energy sector is really struggling. Some of the investments might be good, but some of them could turn out to be bad even with high dividend yields.
Tax on Dividends
Just so you know, ordinary dividends are taxed as regular income. While many investments are taxed at a lower rate due to the increased risks associated with investing, dividends generally don’t enjoy special treatment. The logic is pretty straightforward: dividends are generally predictable, and income produced by them isn’t as high risk as other investments. You should keep the burdens of taxation in mind when investing because said burdens can make a huge difference in the long run.
Either way, dividends offer great investment opportunities and most investors should at least consider adding some dividend stocks to their portfolio. The stability provided by these stocks can provide a sizable and stable form of income, helping you free up some of your assets for more profitable investments. So make sure you take some time to research dividend stocks and consider adding some of these stocks to your portfolio. There are tons of options out there, so don’t stick just to the companies we mentioned. Look for companies that you find attractive but which also offer dividends!