Investing is one of the best ways to build wealth. But having no income from your stock portfolio while you wait years for it to grow can be a drag. Of course, that is the very issue high-yield dividend stocks can help with. They pay you a steady stream of passive income which is perfect if you need cash flow sooner than later.
But not all dividend stocks are created equal. While there are many that pay a consistent dividend, some of them are quite low. And a difference of a few percentage points in your dividend payout can have a huge impact on how much you receive over the years.
To be sure you are maximizing your returns, let’s take a closer look…
The Best High-Yield Dividend Stocks to Buy
- AGNC Investment Corp. (Nasdaq: AGNC)
- Dynex Capital, Inc. (NYSE: DX)
- Prospect Capital Corporation (Nasdaq: PSEC)
- American Finance Trust, Inc. (Nasdaq: AFIN)
- Oxford Square Capital Corp. (Nasdaq: OXSQ)
All of these stocks have exceptional dividends. That alone certainly sounds enticing. However, before we take a closer look at each of them, let’s consider whether high-yield dividend stocks are a good investment.
Are High-Yield Dividend Stocks a Good Investment?
As a whole, dividend stocks have plenty of advantages. As mentioned above, the most obvious one is that you earn regular income from these stocks. And during a bear market when share prices are falling, that’s a nice benefit to have.
However, there are a couple of things to keep in mind about high dividends in particular. For one, if a company’s share price is falling, it may decide to pump up the dividend to attract investors. But if the company’s business model is not a sound one, that dividend is not a sound one. Thus, you may find the share price starts to tank — if it hasn’t already.
Plus, money paid out in dividends is not reinvested in the business. In some sectors, such as real estate, there may not be much need for heavy research and development. But in others, R&D is not something that can simply be neglected. Thus, it’s important to know what you are investing in to assess whether a high dividend is sustainable.
Now, let’s take a look at some of the best high-yield dividend stocks to add to your portfolio.
AGNC Investment Corp.
Dividend yield: 8.89%
AGNC Investment Corp is an internally-managed real estate investment trust (REIT). It invests mainly in agency residential mortgage-backed …….