Great dividend stocks are about a lot more than the yield. A very high yield can actually be a sign of impending problems and point to risk. Many investors love dividend stocks, but they're even more important for retirees or others who rely on passive income, and dividend safety is a premier feature of great dividend stocks for these investors.

Other features you want to look for in a quality dividend stock are company growth, dividend growth, and management's commitment to shareholder value. Realty Income (NYSE: O) is a standout dividend stock because it offers all of this and more.

One of the best ways to buy dividend stocks is to invest in real estate investment trusts, or REITs. The REIT is a structure for certain kinds of real estate owners that requires them to pay 90% of earnings as dividends, and REITs are typically low-growth, high-yielding stocks. Realty Income is unique even among REITs as one of the only ones that pays a monthly dividend.

Continue reading

Source Fool.com