The most recent market slow down has created opportunities for investors, especially those that are interested in high dividend stocks. For investors that search for stocks with higher dividend yields, a down market creates buying opportunities as dividend yields head up as prices go down.
A recent article from SFGate.com presents this viewpoint on this very topic:
The recent market downturn has created buying opportunities for astute investors, especially for dividend stock buyers. Here's why.
The dividend yield for a stock is the return you would achieve over the next 12 months, assuming that both the dividend payout and the share price remain constant for the year.
It's calculated by dividing the expected next 12 months' dividends by the share price. For example, the yield would be 5 percent for a stock currently trading at $100 per share that is expected to pay $5 in dividends the next year ($5 divided by $100). So the dividend yield to new buyers goes up when share prices drop.
Thanks to the weak market, yields on dividend payers with strong fundamental outlooks are higher than they've been for some time.
If you have a watch list of high dividend stocks that you monitor, then the recent market action has provided you with a great opportunity to dip your toes into some shares of those companies. Keep in mind however, we probably have not seen the last of these crazy markets so act slowly and cautiously and think long-term results!
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