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Last week, we discussed a more aggressive industrial stock with the kind of substantial dividend yield usually associated with finance or utility stocks. (View the post: How an industrial stock sustains a strong dividend yield.) Today we look at another dividend stock you could hold in the more aggressive portion of your portfolio.
Investors generally look to aggressive stocks for capital gains and to more conservative stocks, like banks and utilities, for income. Yet there are a number of aggressive stocks that also pay a regular dividend. Some even have dividend yields that are as high — or even higher — than yields on more established companies.
(An aggressive dividend-paying stock that we analyze in our Stock Pickers Digest newsletter had a remarkable rise last year—while most of the stocks in its industry were lagging. I’ll give you the details a little further on.)
As with conservative dividend-paying stocks, aggressive dividend stocks offer investors a measure of security. Dividends, after all, are much more stable than earnings projections. More important, dividends are impossible to fake—either the company has the cash to pay them or it doesn’t.
However, it’s important to avoid judging a company based on the fact that it pays a dividend. Nor should you be tempted solely by a high dividend yield (the percentage you get when you divide a company’s current yearly payment by its share price).
That’s because high yield can sometimes be a danger sign rather than a bargain. For example, a dividend stock’s yield could be high simply because its share price has dropped sharply (since you use a company’s share price to calculate yield). That drop may signal coming bad news.
As well, you should always remember that while aggressive stocks hold the potential for greater gains than conservative selections, they expose you to a higher level of risk — even if they are dividend stocks.
That’s why we recommend that you look beyond dividend yield when making investment decisions, and look for dividend stocks that have established a business and have at least some history of building revenue and cash flow.Don't miss your chance to download Pat McKeough’s new FREE report, "Dividend Paying Stocks: How High Dividend Stocks Can Supercharge Your Income Investing." In this exclusive report, Pat shows you how to spot the best dividend paying stocks for your portfolio—and avoid the ones that could steer you into a financial disaster. Click here to download your copy and get started right away.
Trilogy Energy (symbol TET on Toronto; www.trilogyenergy.com) owns oil and gas properties in the Kaybob and Grande Prairie areas of central Alberta. About 74% of Trilogy’s production is natural gas. The remaining 26% is oil.
Trilogy continues to bring new wells into production and expects to push its average daily production to over 40,000 barrels a day in 2012. The company pays a monthly dividend of $0.035, which gives it a yield of 1.1%.
Over the course of the past year—a year in which many energy stocks sagged—the shares of Trilogy gained 210.8% for our Stock Pickers Digest readers. We will continue to update our advice on Trilogy and whether or not its shares can continue to rise.
If you’re looking for dividend stocks that suit the more aggressive portion of your portfolio—stocks that have the potential for gains of 50% or more in 6 months or less as well as providing income—you really should subscribe to Stock Pickers Digest.
The latest issue of Stock Pickers Digest gives you our full analysis, including clear buy/sell/hold advice, on 20 stocks that you can hold in that part of your portfolio you devote to aggressive investing. What’s more, you can save $50.00 off regular annual subscription rate as a new subscriber. Click here to learn how.Be the first to comment
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