💰Dividend Stocks: how to pick (and what to watch for)
Dividend stocks tempt with regular income — but picking wrong hurts. Here's what to watch.
What a dividend and yield are
A dividend is part of profit paid to shareholders. Dividend yield = annual dividend ÷ share price. A 4% yield = $4/year per $100 invested.The highest-yield trap
An extreme yield (10%+) is usually a warning, not a gift — often the price fell due to trouble and the dividend is at risk (the firm may soon cut it). That's the "value trap."What to look at
- Payout ratio — what % of profit goes to the dividend. Above ~80% = little cushion.
- Free cash flow (FCF) cover — is the dividend paid from real cash, not debt?
- Dividend growth — has the firm raised it for years? (aristocrats = 25+ years of growth)
- Business quality — steady profit > high yield.
How QMA does it
- 🌱 Dividend garden — build a portfolio, track yield, dividend growth and future payouts · 🎯 Screener for quality.
FAQ
Is a high dividend yield good? Not always — an extreme yield often signals an at-risk dividend. Watch sustainability. What are dividend aristocrats? Firms raising dividends 25+ years straight — reliability over speed. How often are dividends paid? Usually quarterly (US), sometimes annually/monthly.---
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Create a free accountContent created by AI in collaboration with Jaroslav Vojtášek. Not investment advice. The author may hold the stocks mentioned. Investing involves risk of loss.
Operator: Jaroslav Vojtášek, Company ID (IČO) 48783447.