6 Dividend Growth Stocks That Can Provide a Lifetime of Passive Income
Dividend stocks have long been popular among investors for the steady streams of passive income they provide. But not all Dividend-paying companies are created equal when it comes to long-term investment potential. The savvy investor knows to look beyond the temptation of a high current yield and focus on the characteristics that signal that a company will be able to provide sustainable returns over time.
So what should buy-and-hold investors look for in a dividend stock? Three crucial factors stand out. First, a conservative payout ratio below 50%, which indicates the company isn't stretching its finances to maintain its dividend. Second, a track record of annual distribution hikes spanning multiple decades. Finally, a robust economic moat that safeguards the company's profitability.
While high yields might catch your eye, they are often red flags that portend the possibility of dividend cuts to come. These events can send share prices plummeting and derail your returns for years. By prioritizing the sustainability and growth of dividends over current yield, investors can build a portfolio of reliable income-generating stocks that stands the test of time.
Source Fool.com
