Dividend stocks are a great way for investors to create passive income within their portfolios. Over the past few years, high-yield dividend stocks have been a favorite among traders who have been looking for ways to beat interest rates with relatively safe investments.
While it’s true that stocks offering a high yield can be a great place to store your savings, not all dividend stocks are created equal.
There’s more to investing in dividend stocks than just evaluating their yield. Many companies with high-yield dividends are paying them out in an unsustainable way. Others are paying out large dividends to keep investors interested, but their business is doing poorly.
This is the case for companies like Frontier Communications Corp (NASDAQ:FTR), Occidental Petroleum Corporation (NYSE:OXY), Mattel, Inc. (NASDAQ:MAT) and Staples, Inc. (NASDAQ:SPLS). While all four pay out some of the highest yielding dividends on Wall Street, their dividend payments are unreliable.