High Dividend Yield Stocks

 High Dividend Yield Stocks

Dividend-paying stocks have two advantages:

- Capital Appreciation through Stock price gain

- Regular dividend payments

Usually, the stable, cash-strong companies are the ones that pay the dividends. These stock are less volatile, and can endure the market downturns.

Dividend Yield is the metric used to determine how much dividend a company is paying.

Formula is:

Dividend Yield (%) = Annual dividend payout per share / stock price

Example: Annual dividend of a company is $2.5 and its stock price is $50. Then, 

Dividend yield = 2.5/50 = 5%

Dividend can be reinvested in the stocks of the same company.

While screening the stocks, we should look at the dividend yield history of a stock. This is because, a company might provide a high yield, just to attract the investors. It is important to see if the history of that particular stock.

Tax Considerations: Generally, the stock dividends are taxed at Capital Gain tax rate. 

Exception: REIT dividends are taxed at the regular income rate, which is much higher than Capital Gain Tax rate.