About 2-3% is solid, while 4% or higher is fairly high-yield. This indicates that Lazard will be able to sustain or increase its dividend. They’re paying out most of their cash flow as dividends, so in order to raise new capital and expand they need to issue new shares. Lazard is a leading dividend payer. Kinder Morgan (KMI) has had trouble in the past but is now a self-funding lower-leverage dividend grower.All of these companies have tremendous returns on invested capital (ROIC) and wide economic moats to sustain them through the business cycle.It also covers some important dividend stock metrics to look at, and some common mistakes to avoid.A company that is increasing its share count is relying on continually raising new capital, and it would be detrimental for their growth if their share price were to fall.
Russia has been beaten down over sanctions and low energy prices, while Singapore serves as a great gateway to Southeast Asia because they have banking assets throughout the region.A better approach is to have an overall portfolio average yield in mind, and assemble it that way. They will have higher valuations and lower yields than some of their shakier peers, but their risk of a dividend or distribution cut is far less.Starbucks (SBUX) is a consumer discretionary company with a lower yield but faster growth that adds a touch of further diversification. And because they were already highly leveraged, they couldn’t take on too much new debt.The percentage of earnings that the business pays in dividends is the dividend payout ratio.High-yield stocks are commonly found in energy, real estate, utilities, consumer products, and a few other sectors. This part of the portfolio helps balance the asset-heavy REITs and MLPs that prefer lower interest rates.Make sure you are diversified across numerous sectors and countries, that your companies have stronger balance sheets than their competitors, and that only a portion of your holdings rely on continually issuing new shares to fund growth.Here’s the problem. Some companies have literally grown their dividends for over 50 consecutive years. They then have to rely on debt or cutting the dividend to raise liquidity.For a normal corporation, this would not have been as big of a deal. Dividend Growth. And this is attractive for dividend investors.Always do your own due diligence, but here’s a sample portfolio of some of the best high dividend stocks I’m bullish on for the long-term:You’ll have to sacrifice a little bit of yield for these stronger metrics, but it’ll be well worth it as your portfolio income remains intact through all parts of the business cycle.Right now, the United States is one of the most expensive markets in the world and it’s important to have international exposure where stocks are cheaper and dividend yields are higher.The problem here is that sometimes the United States stock market becomes highly overvalued. And you’d have fewer no-growth decades.The Vanguard Real Estate ETF (VNQ) and Vanguard Utilities ETF (VPU) give investors exposure to high-yield industries within the USA.Here’s a chart of historical annualized stock performance for Europe, the Pacific region, and the United States, from various decades:Lastly, because the industry saw what happened to Kinder Morgan, many of the most conservative MLPs and REITs are purposely lowering their dividend/distribution payout ratios over time (not by cutting, but by growing at a slower rate than funds from operations) in order to reach a point where they no longer have to issue new shares/units to fund growth.
When markets fall, you don’t want to be in a position of having most of your assets turn into liquidity traps.For a dividend-growth corporation, try to look for names with payout ratios below 60%.Join the new premium research service for timely deep-dive analysis of high-conviction investment opportunities.As a result, they had to cut the dividend to reserve liquidity and remain in business, and years later they are still recovering.Get the insider newsletter, keeping you up to date on market conditions, asset allocations, undervalued sectors, and specific investment ideas every 6 weeks.The portfolio includes a fund called the BlackRock Capital and Income Fund (CII).Your average yield in this case would be a solid 4%, and you’d have exposure to traditionally lower-yielding sectors.Enterprise Products Partners (EPD) and Enbridge (ENB) have among the strongest balance sheets in the industry, don’t pay any IDRs, have strong distribution coverage ratios, and have held up fairly well during energy price declines.
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