The Diversification Conundrum of High Yield Stock Investing
The S 500 index currently offers investors an average dividend yield of a scant 1.4%. You probably couldn't live off of the income stream such a yield would generate unless, of course, you own a particularly large nest egg. So, most dividend-focused investors, particularly those in retirement, will probably be looking for stocks with notably higher yields.
There are plenty of these high-yield offerings to choose from, but there's a potential problem you need to address before you start making any decisions about which ones to add to your portfolio.
Real estate investment trusts (REITs) and utilities are two great places to look for dividend stocks. Financially strong REITs with decades of annual dividend increases under their belts, like Realty Income (NYSE: O), can be bought with a yield over 5%. In the utility sector, you can buy Dividend King Black Hills (NYSE: BKH) with a yield of 4.9%.
Source Fool.com
