Income-seeking investors naturally gravitate towards dividend-paying stocks.
When comparing businesses that pay out dividends, you should be looking at the dividend yield rather than the absolute level of dividends paid.
The dividend yield is obtained by dividing the dividend per share by the current share price.
A higher dividend yield is always sought after by investors as it provides a better return on one’s investment as compared to the dismal interest rates that banks are paying.
However, there are two main aspects that you should look out for when it comes to companies that pay dividends.
First off, is the company increasing or decreasing its overall dividends?
Dividend champions are examples of companies that have consistently increased their dividends over time.
The second aspect is the sustainability of the dividend.
As business and economic conditions change, could these factors impact the ability of the business to continue paying out the same level of dividends?...