A high dividend yield can be the ultimate retirement holding. Or it can be a trap.
Today, I’m going to show you five stocks with mouth-watering yields of between 6% and 23% that are tomorrow’s dividend disasters. If you own shares in any of these firms, sell them now.
Don’t “ride these stocks down” like RadioShack shareholders did when the nearly century-old former electronics retailing giant that filed for bankruptcy protection in 2015.
RadioShack suspended its dividend in July 2012. The warning signs were there, but no one listened. Revenues had been in constant decline since their peak 16 years earlier, debts were mounting, ratings agencies were downgrading RadioShack’s bonds. And in April 2012, RSH reported the first of what would be many quarterly losses.
However, Wall Street pundits kept touting the allure of RadioShack’s dividend as it ballooned from high single digits early in the year to double digits in the months before the cut. The dividend wasn’t growing, of course – RSH was hemorrhaging.
That high yield evaporated overnight, leaving investors with a crumbling, income-less retail dinosaur rotting in their portfolios.
But it didn’t have to happen. For years, investors were warned about the growing danger at RadioShack, and I’d like to prevent the same thing from happening to you.
That’s why today, I want to show you five high yielders that, like RadioShack, are dividend disasters waiting to happen.
Then, I’ll point you in the direction of some big-income plays that you can actually trust for decades to come.