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High-yield Stocks


High-yield Stocks

High-yield stocks are often most appealing to people looking for income, they can also be excellent long-term investments to grow your wealth.
A high-yield stock is often a company that generates substantial cash flows, and return much of it to shareholders. This can include utilities, telecoms providers, midstream oil and gas companies, and other businesses with big scale and predictable recurring revenues.
A financial ratio that indicates how much a company pays out in dividends each year relative to its share price.
While high dividend yields are attractive, they may come at the cost of growth potential. Every Pound a company is paying in dividends to its shareholders is a Pound that company is not reinvesting to grow and generate capital gain.

Furthermore, Utilities, telecoms providers and gas companies, with infrastructure, renewable energy, and health care housing for seniors is all set for many years of high-demand growth in the years ahead.
So not only would investors get 4.6%, 3.9%, and 4.2% yields respectively at recent prices, they could likely count on regular increases in the payout for many years to come.

Buying a stock just because it pays (or the chart makes it look like it does) a high yield can be a big mistake, if you don't know what's really happening with the business. Try to understand the sector you are investing is a must, as any investment you need to do your homework. Buy a share is like buy a company, do ask yourself how much I would pay for this company? This should give you a first

You can start by looking at the value of the business's assets. What does the business own? What equipment? What inventory? After all, you'd have to buy all the same stuff if you were starting a tea shop from scratch, so the business is worth at least the replacement cost. The balance sheet can give you a good indication of the value of the company's assets. If the company doesn't have a good set of books, think twice about buying it. You can get badly burned if the current owners don't even know accurately whether the business is profitable.
The other valuation approaches all think of a business as a stream of cash. They value a business by trying to come up with a value for that stream of cash.




References: Dividend Yield: Formula & Definition | Investopedia https://www.investopedia.com/ 
-          - Wikipedia


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