If you’re investing for income, you should watch out for the high-yield “trap”. This trap involves investing in stocks only because they have high dividend yields. Certain stocks may have high yields because their businesses are in trouble, which could result in lower dividends over time. There are a number of things to look out for in a stock so that we can minimise – but not completely eliminate – the chances of us falling into a high-yield trap. Firstly, we should analyze a company’s dividend history, going back at least a few years. What we need to see is if the company has been consistent in terms of paying a dividend. Secondly, we should also examine the payout ratio of a stock. The payout ratio represents the proportion of net profit that is paid out as a dividend. Generally, a payout ratio that is close to or over 100% is a red flag – it’s hard for a company to continue paying a dividend that’s higher than what it’s earning....