Monday, May 23, 2016

Advantages of Dividend Stocks

Buying shares of companies that pay a dividend is like purchasing an income stream. Investing in companies that regularly boost their dividends is like getting a raise on a consistent basis. Of course, it comes with risks. Those dividends need to be backed by expanding free cash flow and a company shouldn’t pay too much of its free cash flow out in dividends. Personally, I prefer that a company that pays out less than 50% of its annual free cash flow out in dividends.

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