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mytigger
LSU Fan
Member since Jan 2008
12138 posts

What are the con's against owning high yield dividend stocks?


I've never owned any and some of the stocks mentioned in other threads appear to deliver $1+ dividends every 3 mos.... why wouldn't I want to own this?


This post was edited on 12/27 at 9:25 am



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LSURussian
LSU Fan
Baton Rouge
Member since Feb 2005
76112 posts

re: What are the con's against owning high yield dividend stocks?


quote:

why wouldn't I want to own this?

Higher dividend paying stocks are generally not growth oriented companies so their price appreciation is usually slower than other stocks. So it depends on whether your goal is growth or income.

Also, you have to research and be comfortable that the companies you choose will continue to pay those dividends. Look at their history.

When was the last time they raised their dividend? How often do they increase their dividends? What is their dividend payout ratio? Is the dividend sustainable or is it only a temporary attractive dividend yield?

Case in point: Radio Shack. Six months ago RSH had a dividend yield of over 10%. They suspended their dividend recently so their dividend yield now is 0%.







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rmc
LSU Fan
Zachary, LA
Member since Sep 2004
22405 posts

re: What are the con's against owning high yield dividend stocks?


quote:

Case in point: Radio Shack. Six months ago RSH had a dividend yield of over 10%. They suspended their dividend recently so their dividend yield now is 0%.


I will add to this case in point. PGH had a dividend of over 10% a little over six months ago, the stock has lost half its value in that time and cut its dividend in half. I guess the silver lining for me is that the dividend yield is back around 10%.



This post was edited on 12/27 at 10:12 am


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mytigger
LSU Fan
Member since Jan 2008
12138 posts

re: What are the con's against owning high yield dividend stocks?


Thanks Russian. Most all the companies everyone listed in the other thread appear to be coming down off of highs that topped out last year which began climbing in the 2003-04 area. Maybe I'll wait 2 years before jumping in.





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LSURussian
LSU Fan
Baton Rouge
Member since Feb 2005
76112 posts

re: What are the con's against owning high yield dividend stocks?


quote:

Thanks Russian.


quote:

Most all the companies everyone listed in the other thread appear to be coming down off of highs that topped out last year which began climbing in the 2003-04 area. Maybe I'll wait 2 years before jumping in.



If your objective is income (dividend yield) and you wait two years to buy, you have to weigh how much income have you lost by waiting.

If you wait until you're absolutely sure you catch the bottom of the market, you'll be waiting forever.

Having said that, I wish I had waited just one week longer on the stocks I bought last week.






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