Buying Verizon Stock for Its Dividend? Read This First.
Dividends are an attractive proposition for owning a stock. After all, it's nice to get paid only for owning something. When looking at high dividend-yielding stocks, three sectors often come up: utilities, real estate investment trusts (REITs), and telecoms. These businesses usually have very consistent cash flows, allowing them to pay a higher-than-average dividend to shareholders.
Among the telecoms is Verizon Communications (NYSE: VZ), the second-largest provider behind AT&T. The stock sports an attractive 6.89% dividend yield, which also places it in red-flag territory. Often, when a stock's dividend yield rises higher than 5%, it's seen as a warning sign that the company won't be able to pay its dividend obligations sustainably.
Should Verizon shareholders be concerned? Or is there another reason for its high yield?
Source Fool.com
