Silverblatt also argues companies that have raised dividends for at least five to six consecutive years are still a good place for stable dividends since the action typically suggests the dividends are part of the companies’ “culture” or long-term plan.
On the other hand, the S&P analyst issued a warning on the highest-yielding dividend stocks. He also suggested focusing on large-cap companies, which have a greater chance of paying a steady yield – according to S&P data, 84% of large-cap stocks offered dividends, compared to 46% of small-cap stocks. Smaller stocks have increased dividends recently, but these same companies were at greater risk of declining.
“A high yield is not a good sign,” Silverblatt added. “Remember the dogs of the Dow? Just because it’s paying today doesn’t mean it will continue to pay tomorrow.”
For more information on dividend stocks, visit our dividend ETFs category.
Max Chen contributed to this article.