It's a common misconception among investors that a high dividend implies that stock is highly volatile or that the company must be in some sort of trouble.There are some cases where this is definitely true. For example, mortgage REITs generally pay dividends of more than 10%, and because of their leverage ratios, they can be some of the more volatile stocks in the market.
Also, there are the "too good to be true" dividends that we see if a company is in trouble. If a company usually pays around 3%, and all of a sudden the share price drops dramatically and the dividend spikes to 8%, it usually means that there's a dividend cut coming or that the company is having serious financial issues.
However, there is such a thing as stable, high-dividend stocks. Here are seven of the best choices for investors who want income but don't want volatility or high risk. All of these pay at least 5% per year and have characteristics that income seekers love -- and they range from basic-needs companies like AT&T (NYSE:T) to diversified holding company Icahn Enterprises (NASDAQ:IEP).
Some of the best dividend stocks in the market
The smartest investors know that dividend stocks simply crush their non-dividend-paying counterparts over the long term. That's beyond dispute. They also know that a well-constructed dividend portfolio creates wealth steadily, while still allowing you to sleep like a baby. Knowing how valuable such a portfolio might be, our top analysts put together a report on a group of high-yielding stocks that should be in any income investor's portfolio. To see our free report on these stocks, just click here now.
Matthew Frankel has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.