3 High-Yield Dividend Stocks With Payout Ratios Below 75%
High-yield dividend stocks can be enticing, with several academic studies showing that stocks yielding above 3% tend to outperform most other asset classes when held for 20 years or longer. However, dividend yield isn't the most important metric to consider when evaluating stocks with cash or stock distributions.
A recent report by Hartford Funds reveals a crucial insight: Dividend stocks with payout ratios below 75% often perform better in the long run compared to those with higher ratios. The reason for this outperformance lies in the long-term sustainability of distributions, which is critical to harness the power of compounding.
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Source Fool.com
