I have written multiple articles on dividends, typically positive, discussing the virtues of dividend paying stocks and why they are so valuable to your portfolio.
Dividends are great. They provide income to your portfolio, and they typically signal strength to the company's underlying business. However, the sole fact that a company pays a dividend does not automatically mean it’s a good buy candidate.
I have looked at solid dividend stocks that are likely to increase their dividends, dividend stocks that everyone should own, and attractive high yield dividend stocks; but one thing I have overlooked is an article on dividend stocks to avoid.
This week I decided to take a different approach, and instead to look at five high-yield dividend stocks (4% or greater), that investors should avoid. In these five cases, I believe that there are better alternatives out there, and that enough reasons exist to consider these dividends not worth the risk of owning the underlying security.
Look over our list, and if you hold any of these stocks in your personal portfolio consider giving your position a second look. Do you really believe in the company, or are you holding the stock just because of its dividend? If the answer to that question is that you hold the stock just for the dividend, there may be better dividend-paying stocks out there to choose from.