Various companies all over the world operate at different levels of success. While some remain private companies, others become publicly traded entities.
This may attract more investment into the company. The more successful a company is, the more likely it is to create income opportunities for investors. The dividend yield varies from one company to the next.
What is the dividend yield?
This is a financial ratio that shows how much a company pays out in dividends each year, relative to its share price. This amount is represented as a percentage.
In South Africa, the best dividend stocks include companies such as:
- Anglo American
- MTN Group
- Barclays Africa Group
- Growthpoint Properties
- Imperial Holdings
- Vodacom Group
- Nedbank Group
- Standard Bank Group
- Old Mutual
In this country, industries that have the highest dividend yield are usually financial and industrial companies. If you are looking to invest in a dividend-paying company, it may be wise to consider these industries first.
While a high dividend yield is a good thing, it must be noted that balance is required. Exceptionally high dividend yields could possibly indicate that there is possibly something flawed in the company.
For this reason, dividend stocks require constant attention.
Share prices fluctuate with changes in the economy. Blue chip stocks are less likely to fluctuate too much despite changing market conditions, as they are usually highly successful companies. Generally, dividend-paying companies have substantial amounts of cash. They are usually strong companies with good prospects for long term performance. These stocks are generally good for risk-averse investors, because they generally don’t fluctuate too much even in times of economic instability.
Financial institutions, industrial companies, properties and telecommunications companies are industries that usually present with the highest dividend yields.
There are reinvestment plans available which allow investors to build a larger position in a company over a period of time.