This High-Yield Stock Is Not What It Seems
For dividend investors, high yields are like a flame is to a moth -- often too hard to resist, even if you might end up getting burned. As a case in point, HanesBrands' (NYSE: HBI) 9.8% yield, as presented recently by some major online quote services, is ephemeral at best. Here's why this fat dividend isn't real and why conservative dividend investors need to do some homework before buying a stock.
An S&P 500 Index ETF will provide investors with a yield of around 1.65% today. The average consumer staples stock, using the iShares US Consumer Staples ETF as a proxy, has a dividend yield of around 2.15%. So the huge yield apparently on offer from HanesBrands is quite attractive, relatively speaking. That yield is also near its highest levels over the past decade, so it is seemingly attractive historically speaking, as well.
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Source Fool.com
