Danger Lurks for These 3 High-Yield Dividend Stocks

Danger Lurks for These 3 High-Yield Dividend Stocks

Buying dividend stocks is a time-tested way to build wealth, but investors often chase stocks with high yields without doing their homework. High payout ratios -- or the percentage of a company's earnings or free cash flow spent on dividends -- are red flags that indicate a dividend could be cut.

A company's earnings growth could also peak, and a stock's decline could erase any dividend gains. Therefore, let's examine three high-yielding stocks which initially look attractive as income plays but actually conceal hidden dangers: Coca-Cola (NYSE: KO), Qualcomm (NASDAQ: QCOM), and Vector Group (NYSE: VGR).

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Source: Fool.com