Stay Away! 3 Dividend Stocks That Are Yield Traps

Stay Away! 3 Dividend Stocks That Are Yield Traps

Good dividend stocks can create long-term wealth through solid earnings growth, consistent dividend hikes, and the "magic" of compounding. Meanwhile, bad dividend stocks lure in investors with big yields, then cut their payouts as their stocks stumble.

Investors can spot high-yield traps with three red flags -- an oversized yield, deteriorating earnings growth, and payout ratios (the percentage of a company's earnings or free cash flow spent on dividends) exceeding 100%. Here are three bad dividend stocks that tick those boxes: CenturyLink (NYSE: CTL), National CineMedia (NASDAQ: NCMI), and Abercrombie & Fitch (NYSE: ANF).

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Source: Fool.com