When it comes to dividends, any stock yielding more than 10% these days needs to be taken with a grain of salt. That’s because bigger isn’t usually better when you’re talking about dividend yields.
Any income investment can be priced relative to government interest rates, currently between 2% and 3%, depending on how much extra risk you’re willing to take on. Historically-speaking, any time a stock is paying more than seven percentage points above the AAA-rated, government-secured debt, investors begin to worry if the dividend could be cut.
However, following the 7% loss suffered by the S&P 500 in October, more stocks are sporting a double-digit yield that at any other point in 2018.… Read more