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Dividend stocks (especially stocks with high paying dividends) are a great way to build a portfolio of investments. These companies pay out dividends to shareholders, which can be reinvested into other dividend-paying stocks and used to grow your wealth.
What Are Dividend Stocks?
A dividend stock is a stock that pays out a portion of its earnings as cash dividends. The amount of the dividend is based on the company’s earnings and capital structure (the number of shares it has outstanding). It may also be subject to certain restrictions or limitations that control how much you can receive per payment. Hence, the query of a lot of investors who are looking for stocks with high paying dividends.
Advantages of Dividend Stocks
Dividend stocks offer many advantages over other types of investments. Here are just some of the advantages of stocks with high paying dividends:
- They’re generally less risky than stocks with more volatile returns, such as large caps and emerging market stocks (EM). This makes them suitable for retirement accounts and other tax-deferred accounts where you don’t want to be exposed to higher risk investments like those mentioned above.
- Many companies that pay dividends have high yields (or stocks with high paying dividends), which means they can double or even triple your money over time if properly invested at least quarterly. Higher yields mean there are more opportunities to make money from dividends, which is why dividend stocks are so popular with investors.
- Dividends can be a great source of income in retirement, especially if you’re relying solely on Social Security or other fixed income annuities for support.
- Dividend-paying stocks tend to outperform non-dividend paying stocks over time due to the fact that many investors prefer them as a safer option when it comes to investing.
- Dividends can be used to offset other expenses, such as taxes or debt payments, which is why they’re so important for retirees and investors alike.
5 Stocks With High Paying Dividends That You Need To Have in Your Portfolio
Here is the list of stocks with high paying dividends.
OneMain Holdings Inc. (OMF)
OneMain Holdings Inc., formerly known as OneMain Financial Inc., is an online financial services company. It operates through the following business segments: Consumer, Retail and Lending, Business Lending and Corporate. The Consumer segment offers payroll loans, installment loans and overdraft protection products to consumers; the Retail segment provides retail financing products such as private label credit cards and other consumer finance services; the Lending segment offers personal loans and commercial loans to consumers, businesses and government agencies; and the Business Lending segment provides secured lending solutions for small businesses through its subsidiary, American Capital Agency Corp.
Lumen Technologies Inc. (LUMN)
Lumen Technologies Inc. is a software company that develops and licenses its proprietary technology platform to provide real-time, automated and predictive intelligence to the insurance industry. The company provides its clients with an integrated solution that combines data analytics, artificial intelligence, machine learning, and human domain expertise. Lumen’s products include Lumen Core for Claims Management, Lumen Predict for Insurer Risk Management and Lumen Insights for Customer Relationship Management (CRM).
Starwood Property Trust Inc. (STWD)
Starwood Property Trust Inc. is an investment real estate company. The Company’s business is to acquire, manage and sell commercial properties located in the United States. It operates through four segments: Retail, Office, Industrial and Other Properties. Starwood Property Trust Inc. was founded by Starwood Capital Group on March 3, 2011 and is headquartered in Bethesda, Maryland.
Rithm Capital Corp. (RITM)
Rithm Capital Corp. is a holding company which engages in the provision of securities brokerage services, investment advisory services and direct investments in public markets through its subsidiaries. It operates through the following business segments: Investment Advisory Services, Securities Brokerage Services, Trading Technologies Group Inc., Investment Products Group Inc., Asset Management Services Group Inc., Equity Funds Group I Ltd., Equity Fund II Ltd., Global Securities Group Inc., Global Index Fund Solutions.
Devon Energy Corp. (DVN)
Devon Energy Corp. is an American oil and natural gas company headquartered in the Woodlands, Texas. It is engaged in the exploration and production of crude oil and natural gas, as well as other energy-related activities such as coalbed methane extraction. Devon has operations in Argentina, Bolivia, Canada, Colombia, Egypt, Equatorial Guinea, Gabon, Indonesia, Iraq, Kazakhstan, Libya and Malaysia. It has exploration and production operations in the United States and Canada. Devon’s operations are primarily focused on the United States Gulf Coast region, the Permian Basin of West Texas and New Mexico, North Sea offshore Scotland and Egypt’s Nile Delta.
How To Choose the Right Dividend Stocks for Your Portfolio
It is no secret that dividend stocks (stocks with high paying dividends) are the best way to make money in this market. But how do you pick the right ones?
First, look at your investment horizon. Some dividends last for years and you will have a chance to reinvest them again in future once they mature. Others pay monthly or quarterly, so you need to be careful when choosing them.
Second, take into account the financial health of the company. If it’s big enough and its annual revenue is growing faster than its expenses, then it can afford paying a big dividend. On the other hand, if it’s small and just started its business, it might not be able to afford paying dividends yet.
Third, look at the industry segment where your chosen company operates in. It’s hard for companies from different industries to compete for consumers’ attention because everyone has different needs and preferences; thus it makes sense for them to focus on their own areas of expertise rather than wasting resources on other industries that don’t bring in much revenue anyway.
Fourth, track how well-known your chosen stock is among other investors in your country/area/city/region (wherever you live).
3 Ratios That Help You Decided The Right Dividend Stocks to Invest in
When you’re looking for the best dividend stocks (stocks with high paying dividends), you need to understand how to analyze them. There are three main ratios that you can use to evaluate dividend paying stocks:
Dividend yield
The dividend yield tells you how much money you’ll make on an annual basis by owning a stock (in this case, the Stocks). The higher the dividend yield, the better.
Ratio of earnings-per-share (EPS) to price-to-earnings (P/E)
The P/E ratio is a measure of how much an investor pays for each dollar of earnings. A low P/E means that investors are paying less per dollar of earnings and will get more cash back in dividends. A high P/E means that investors are paying more per dollar of earnings and will receive less cash back in dividends.
Dividend payout ratio
This metric tells us how much money a company has paid out as dividends over its history compared with what it has taken in as revenue. A high payout ratio indicates that companies may be generous with their shareholders and could mean they have excess cash on hand which could be used to repurchase shares or make additional investments in their business.
Conclusion
Although dividend income (from stocks with high paying dividends) is a pretty stable income and dividend stocks are not as volatile as the others, but one must research about the company and exercise caution before investing into the stock. The above information is for knowledge purpose only and we do not recommend investment into the stock purely on the basis of the information above.
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