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Dividend stocks are a great way to build long-term wealth. But how do you pick the right ones—and steer clear of companies whose payouts are headed off a cliff?

You can start by avoiding the five classic blunders below. If you’ve made any of them, don’t worry. We all have. But keeping them in mind will help you stay off the rocks and boost your future returns.

1. Focusing on High Yields—and Nothing Else

For many investors, buying dividend stocks is a simple matter of seeking out a high yield—above 6%, say—and hitting the buy button.

That’s the worst thing you can do, because many stocks paying out at those levels are nothing more than “yield traps”: their profits and cash flow simply can’t back up their hefty payouts.… Read more

The S&P 500 may yield just 2.2% today – but if you smartly invest in stocks that specialize in profitable niches, you can collect 6-11% yields right now. With double-digit price upside to boot!

Real Estate Investment Trusts (REITs) are some of my favorite vehicles for specialization and yield. REITs must have 75% of their assets in actual real estate and earn 75% of their income from those assets. These dividend machines are legally required to pass along at least 90% of their earnings to shareholders.

This is actually the best time to buy REITs this decade. The Vanguard REIT Index ETF (VNQ) pays 3.9% today – just about its highest since 2009.… Read more

Worried about President Trump? The Fed? China’s economy?

All of the above?

If so, here’s some simple advice – ignore it all, and invest only in “sure things.” You see, no matter what American voters, Janet Yellen, or Xi Jinping decide to do later this year, there’s one sure economic bet in the U.S…

The country will be a lot older in the future than it is right now – thanks to 10,000 Baby Boomers turning 65 every day. Remember how this generation drove the U.S. economy since their infancy in the 1950s?

• Post-WWII makers of baby products recorded record profits thanks to their wares flying off the shelves.

Looking for an easy way to boost your portfolio’s yield by 30% and watch your dividends rise more than once a year? I’ve got one for you. And it’ll help you pick up some valuable international exposure, to boot.

All you have to do is look north, to Canada, where there are plenty of top-flight dividend stocks on sale now, like the two I’ll name a little further on.

I know that when most US investors think of Canada, they think of oil and gas—not exactly the best place to be right now. (And these days, some of us may be looking to our northern neighbor as a refuge if Donald Trump wins the presidency.)… Read more

Income investors, specifically those invested in stable Real Estate Investment Trusts (REITs), have been able to ignore most of the recent market mayhem. These issues have little exposure to energy prices, and China. Typically, they’re a pure U.S. economic play with stable income streams.

Plus, they’re pretty cheap right now. The Vanguard REIT Index Fund (VNQ) is paying its highest yield this decade (4.1%).

I’ve been a strong advocate of REITs since they became “too cheap” in mid-2015. After all, they’re legally required to pass along at least 90% of their earnings to shareholders. It’s a solid formula for market-beating dividend yields.… Read more

First, it was Kinder Morgan (KMI). Then, ConocoPhillips (COP). Which sacred dividend is going to get cut next?

Regular readers know that I believe big oil is a big avoid for now. But if you insist on speculating in the goo patch, stick with Exxon (XOM).

There are payout problems outside of energy, too. A quick look at Reality Shares’ DIVCON screen reveals seven 4% payers in “DIVCON 1” territory. This means they’re more likely to cut their dividend than raise it. Let’s discuss these, and a few more high yielding problem children.

1 Shaky Telecom

Frontier Communications Corp.… Read more

With all the bloviating on the campaign trail about reeling in drug costs these days, it’s safe to say the pharmaceutical industry is under siege.

But it’s not all the politicians’ fault; many of the sector’s injuries are self-inflicted. Case in point: Valeant Pharmaceuticals (VRX), whose stock has plunged 62% amid ongoing accounting concerns.

Investors, predictably, have voted with their feet: since the start of the year, the iShares US Pharmaceuticals ETF (IHE) has plunged almost 14%, nearly tripling the S&P 500’s decline.

But as with any selloff, it’s not just sickly stocks that are being punished. It’s the healthy ones, too.… Read more

Stocks that raise their dividend meaningfully every year will make you a lot of money over the long haul… provided they continue to boost their payouts, of course.

Studies by two global investment heavyweights, BlackRock and GMO, have shown that 90% of U.S. equity returns over the past 100 years have been thanks to dividends and dividend growth.

Ned Davis Research also conducted its own 43-year study on stock returns (from January 1972 through December 2014). The conclusion? Dividend payers are good… but dividend growers are great. Stocks that paid a growing dividend delivered double-digit returns and outpaced steady dividend payers by nearly one-third:

Annual Rate of Return (Ned Davis Research)

Over time, this compounding really adds up as these stocks pull away from stagnant payers and the market at-large:

Dividend Growers Pull Away Over Time

Worried about the Fed’s rate cycle?… Read more