Those payments not only offer downside protection, but they can also compound returns over time. Still, one of the dangers of dividend investing is chasing after high yields.
Case in point: The 10 stocks listed below have the highest yields of all the companies in the S&P 500, but not all of them are worth your investing dollars. In many cases, there's a good reason such stocks have high yields -- because there's a lot of risk involved. If you're a dividend investor, there's nothing more important than free cash flow (FCF).
This represents the amount of money a company was able to put in its pocket at the end of the year, minus capital expenditures. It is from FCF that dividends are paid, and investors should generally aim for companies that use less than 85% of their FCF to pay dividends.
Attached you will find a couple of stocks with a low price multiple in relation to its free cash flow. Each of the listed stocks has a dividend yield over 4 percent, a market capitalization over 2 billion and a debt-to-equity ratio below 1.
These are the results...
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| 15 High Yielding Cheap Stocks By Price To Free Cashfow (click to enlarge) |
