5. Dividend Stocks
What are they?
Dividend paying stocks can be an important component of a diversified portfolio. Unlike fixed-income securities, dividend paying stocks could raise their dividends. Preferred stocks are a kind of hybrid - their dividends are fixed, but take priority over dividend payments to the same issuer's common-stock shareholders.
What are the risks?
The recession could force some companies to cut or stop paying dividends.
Examples
- High quality companies with strong balance sheets, sufficient cash, and low dividend payout ratios, such as Verizon, AT&T, Pfizer, and Dominion Energy.
- Banks are risky plays, sch as JPMorgan Chase, and Wells Fargo.
- Preferred stocks or ETFs, such as IShares Preferred and Income Securities (PFF).
In next blogpost, we will discuss Closed-end Funds.