Why Dividend Yield Alone Isn’t Enough

When evaluating dividend stocks, many investors are drawn to the allure of a high dividend yield. However, focusing solely on yield can be a dangerous strategy. A high yield might seem attractive on the surface, but it could be a sign of underlying issues, such as a declining stock price or a company struggling to maintain its payouts. The key to successful dividend investing is understanding that yield alone isn’t enough; you must also consider the company’s financial health and earnings potential.

At Fly High Investing, we emphasize the importance of earnings as the true driver of sustainable dividends. As discussed in our article “Earnings Fixes Everything,” a company’s ability to generate consistent and growing earnings is what ultimately supports and grows dividend payments. Without solid earnings, even the highest yield can become a liability, as the company may be forced to cut its dividend in tough times. By focusing on companies with strong earnings and a proven track record of profitability, you can build a portfolio that not only provides high yields but also ensures those dividends are sustainable for the long term.

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