High-Dividend Stocks: How to Spot the Safe Bets vs. the Gambling Plays

Written By

Manoj Prasad

It's hard to estimate a safe dividend yield because it depends on the company's financial health, dividend policy, and market conditions.

But some stocks with high dividends are thought to be safe and have been named as such by financial experts. 

Kinder Morgan, Equinix, and Lockheed Martin are super-safe dividend stocks due to their contractually assured cash flow and predictable earnings.

These companies generate a significant portion of their earnings from take-or-pay contracts and fee-based contracts, which provide a stable income stream

However, high-dividend stocks with aggressive payout ratios, dangerous debt loads, or secular declines may be risky.

It is essential to conduct thorough research and analyze the financial health of the company before investing in high-dividend stocks.

In general, sustainable dividend yields tend to be around 3-4%, and anything with a yield of 10% or more is considered a gamble

It is crucial to balance the risk and potential reward when investing in dividend stocks, as a higher yield often comes with higher risk.