How to Separate Healthy Yields From Unhealthy Yields
Ever heard the saying “too much of a good thing”?
In this week’s State of the Market, Chief Income Strategist Marc Lichtenfeld discusses how to separate strong, high-yielding stocks from empty-calorie dividend payers.
Because you should never judge a stock by its yield alone…
Especially when the yield is the problem.
One reader, whom Marc has nicknamed “Mr. HighYield,” recently wrote in about a slew of double-digit-yielding stocks, asking why Marc hasn’t recommended them…
Including a certain mortgage real estate trust with a heart-palpitating 13.2% yield.
But as Marc explains in this week’s video, the stock Mr. HighYield referenced is equivalent to a guy who tries to bench-press too much weight to impress onlookers.
The weight-lifting showoff might get in an impressive rep or two, only for his arms to wobble and give out. If he survives his blunder, he then has to cut how much he lifts.
Similarly, a stock can struggle under the weight of its yield, necessitating cuts.
That’s why in this week’s episode, Marc instills in you the financial literacy you need to look at a company’s numbers and calculate whether it can afford to pay its dividend.
Don’t blindly walk into a double-digit trap like poor Mr. HighYield…
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