With the 10-year Treasury yielding well under 2 percent, you’ve probably heard a lot about dividend-yielding stocks. But dividend yield is a tricky metric. It’s calculated by dividing annual dividends per share by price per share. Therefore, a high-yielding stock isn’t necessarily attractive in and of itself.
Here’s why. Yield increases when either dividends increase, (a higher numerator) or when share price decreases (a lower denominator). That second scenario isn’t terribly attractive.
That means when using dividend yield to make an investment decision, you can’t just take a higher yield at face value. You must also examine the fundamentals of a company to determine why the stock is yielding what it’s yielding.
Confused? No need. Fast Money has done the legwork for you. Following is a list of favorite dividend yielders from our pros. These are companies the Fast Money gang says offer a strong return and have strong fundamentals, too.
By Lee Brodie
Posted 9 July 2012