When a retiree decides to buy stock, they often start by looking at companies that pay the highest dividends. Unfortunately, those payouts aren't promised, and focusing on them can turn out to be a dangerous way to invest.
Take Annaly Capital, as an example. The stock sports a 10.5% dividend. That seems enticing until you realize the number of shares outstanding has jumped from 947 million at the beginning of 2016 to 1.4 billion today. While you were collecting the dividend from Annaly -- which was cut in June of this year -- your ownership stake in the company was reduced by 50%.
Shareholder yield is a better metric of how much cash the company is returning to investors because it takes into account both dividends and share buybacks. Two of the companies that rise to the top when looking at shareholder yield are JPMorgan Chase (NYSE: JPM) and Amgen (NASDAQ: AMGN). Despite being vastly different, they're both stable, well-known companies that could make great investments for retirees.
Source Fool.com