Part of the big-picture version of the American dream is being able to make a living off dividends from your investments. This is a goal that many Americans find themselves trying to make happen, only to come up short. A lack of understanding of the stock market makes this even more difficult.
Starting with the basics, let’s look at what stocks are. Companies decide to open the doors for external investors to own the company in whole or part. With many companies opting to only make a portion of the company publicly traded, leaders retain near-complete control. That being said, they still have voting on a yearly or quarterly basis, and stockholders are often asked for their input, this depends on the stock type.
Researching your stock and getting the best bang for your buck is crucial. By knowing what type of stocks you are buying, you’ll learn about your voting rights, as well as the dividends you could receive. Simply put, dividends are profit sharing. When the company turns a profit, a certain percentage comparable to the stock price is paid out. Some pay out monthly, others quarterly or annually.
When deciding on a stock, the Dividend Yield is crucial to consider. Most analysts consider 4% to be the sweet spot, with 11% serving as the top before stocks become too risky. Below are four dividend-producing stocks that could help you turn a solid profit and help bring retirement just that much closer.
- UNIT – Uniti Group Inc. is a real estate company with a focus on the acquisition and construction of infrastructure of telecommunications equipment. First paying dividends in 2015, the company spent years paying out $0.60 a share three times a year when the stock was trading at $20 per share or more. Now, they pay out $0.15 a share but cost less than $6 per share. With this 10.79% Yield paid out every quarter, they can be in a solidified position in the future with minimal downside.
- LNC – Lincoln National Corp. is an insurance and retirement corporation. Serving as investors who already make money for others, they know the way the market works, and they have established themselves as experts in the fields. While the $ 28-a-share average is higher, the 6.67% yield is safe. Totaling $1.80 a share every year coming as $0.45 per share every three months adds up. Their stock was shrunk by COVID, but the dividends remained. Now as it goes up, this is the time to invest.
- GES – Guess? Inc. is a long-established push-label brand. Based on the distinct American and European fashion models, the company brings in $1.20 a year for a 5.25 Dividend Yield. Their $23 a share price is again a tad high for some, but their dividends have been paid out at a consistent rate since 2010, with limited COVID and design choice drops. Currently projected to continue their growth, Guess? Is one of the few mid-90s companies to not end up washing out and becoming low-end consumer goods.
- PSEC – Prospect Capital is a company specializing in mid-market companies for processing debt and assisting in buyout processes, and they take a controlling interest in their investments. Currently returning a 12.02% high-risk Dividend Yield, their $6 a share price and monthly $0.06 a share return for a $0.72 annual return are higher risk but still consistent. Paying out this rate since 2017, the ability to make a significant profit with capitalizing returns is there.
While no stock is “guaranteed” to keep the same historical dividend rate, and you need to do your research before you invest, 2024 is the year to make the change. If you do your research and invest smartly, there is no reason dividends can’t provide a safe base to operate out of. Given all the uncertainty the world is facing, you might hesitate your keep money tied up, but the only safe place is with a diversified portfolio. Make sure dividend-paying stocks are a part of that portfolio.
