High Yield Dividend Stocks For Safety

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Dividend Stocks Research
High Yield Dividend Stocks For Safety
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• Hi, My name is Aaron and Im with Dividend Stocks
  Research, today were reviewing our recently
  published article

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• High Yield Dividend Stocks For Safety

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• On a mild Saturday night a few weeks back,I went
  with a good friend to Donovans on Prospect
  Street in LaJolla. What a terrific place, one of
  those classic American steakhouses we cant seem
  to get enough of.

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• It got me thinking about the strange similarities
  shared by steaks and stocks. A steak that costs
  more than 50 bucks strikes me as a bit over the
  top. So does a dividend stock with a 10 yield.
  A little rich for my blood.

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• So let me ask you a few questions. How high is
  too high? What do you think high yield is? A
  dividend stock that pays more than 5? More than
  10?

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• Can we split the difference and agree on 7.5? If
  not, lets talk it over at Donovans. (And hope
  that somebody else picks up the tab.) Well have
  a great steak, maybe a few cocktails, and look at
  dividend stocks for safety.

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• The Tender Trap Of High Yield Dividend Stocks

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• Earlier this year, before the markets were
  roughed up, my associate Michael Jennings looked
  ahead, didnt like what he saw, and revealed the
  best dividend growth stocks for uncertain times.

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• Good advice then, and good advice now. Chasing
  high yield never seems to work out. Its always
  smarter to take the lower yield and latch onto a
  stock that will keep growing its dividends year
  after year.

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• Thats the safe move. But even when you find a
  dividend stock in a good position to keep growing
  the dividend, you can hit some rugged headwinds.
  You can feel like the guy at the steakhouse whos
  handed a bill he wasnt quite expecting.

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• Investors in one of the top pharmaceutical stocks
  felt like this a few weeks ago when Eli Lilly
  LLY shares sank 7.8 in just one day. Were not
  talking about a wild, speculative microcap.

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• Lilly has been in business since 1876. Its been
  a decent dividend stock for years. The dividend
  has been growing steadily. Ten years ago, the
  quarterly dividend was 0.38. Now its 0.50.

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• Not spectacular, but steady. And there hasnt
  been a dividend cut since 1996. Why isnt Eli
  Lilly feeling well? What sent the stock into
  cardiac arrest earlier this month?

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• The company was exposed as a one trick pony. It
  wasnt diversified enough to protect against a
  setback.

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• If You Want Dividends To Grow, Dont Put All Your
  Eggs In One Basket

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• On October 12, word came out that Lilly was
  pulling the plug on an experimental heart drug.
  In a matter of hours, the value of the company
  plunged by 7 billion.

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• Investors took a terrible hit when Lilly stock
  plunged from 86.35 to 76.35 in one dismal day.
  Investors looking for dividend growth from Lilly
  are on hold, not exactly thrilled with the 90
  million

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• pretax charge for shutting down development of
  its evacetrapib drug. The key is diversification.
  Lilly hasnt been actively acquiring other
  companies.

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• Its not exactly a poster child for expanding its
  lineup of products . The product development
  pipeline isnt nearly as full as it should be
  with new drugs.
• Is the dividend safe?

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• Tough to say, but dividend growth is probably at
  risk. When you cant see how revenues will grow,
  you cant see how dividends will grow. Its like
  the line from the old Sinatra tune, Love And
  Marriage.

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• You cant have one without the other. So when
  youre looking for the best dividend stocks to
  give you some safety, look at how well the
  company is diversified. Dont ride the one trick
  ponies.

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• But dont go overboard. A drug company that
  makes luggage probably isnt going to do well.
  Conglomerates have a way of flaming out. (The
  exception, of course, is Warren Buffets
  Berkshire Hathaway.)

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• Look for a company that sticks to a business it
  knows, makes smart acquisitions, and introduces
  complimentary new products. Want another way to
  find the best high yield dividend stocks for
  safety?

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• Stay Away From The Dividend Whipsaw

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• High yield dividend stocks come and go.
• You and I can go find dozens of stocks that pay a
  double-digit yield. Its easier than finding a
  steakhouse.

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• And heres something else that comes and goes.
  The size of the dividend payment. Some companies
  dont worry about dividends that rise and fall.

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• Its the nature of the beast, because the size of
  the dividend payment reflects the fortunes of the
  company. Consistency isnt important to this kind
  of company. Its built to do something else.

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• Want an example? One of the big name, high yield
  dividend stocks right now is The Blackstone Group
  BX. Blackstone pays a yield of 8.92.

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• Its an investment banking firm that owns an
  intriguing collection of assets. Blackstone is
  the worlds 1 alternative investment firm. It
  focuses on private equity, hedge funds, mergers
  and acquisitions, and private placements.

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• A bunch of complicated financial stuff most of us
  will never completely understand. But it does own
  some meat and potatoes assets, including Motel 6.

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• Should you buy Blackstone stock if youre looking
  for some safety with a high yield?

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• If you dont mind dividends rising and falling
  like the fortunes of the Dallas Cowboys, sure.
  Just dont invest in Blackstone if you want a
  consistent yield. Last year, it cut the
  quarterly dividend from 0.55 to 0.44.

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• Fortunately for investors, the dividend went back
  up. It paid an 0.89 dividend in May. Then, in
  September, it was back down to 0.74. Is now a
  good time to buy Blackstone?

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• Check out this chart, and youll see that like a
  lot of other stocks, Blackstone has come off its
  recent highs...

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• One other thing to keep in mind with
  Blackstone... If it runs into some financial
  headwinds, its got plenty of assets to sell
  especially real estate assets - to keep the
  balance sheet clean.

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• Your Safe Approach To High Yield Dividend Stocks

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• There you go. Two ways to lower your risk when
  youre looking at the best dividend stocks for
  high yield. Be careful when a company puts too
  many eggs in one basket.

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• And if youre looking for income you can count
  on, make sure the dividend payments are
  consistent. High yield dividend stocks have a way
  of drifting in and out like trendy restaurants.

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