High-yield dividend stocks typically play a vital role for investors planning for retirement. However, like many things in life, there is no such thing as a free lunch when it comes to income plays.
Many of the highest-yielding dividend stocks are too good to be true. Their high yields simply reflect a higher risk profile and an unsustainable dividend that will be put on the chopping block in the future. For investors living off dividends in retirement, that’s a disaster just waiting to happen.
As a result, conservative income investors would do well to steer clear of most stocks with dividend yields well above 6%.
Not every high-yield stock turns out to be a trap, however.
Today, we’ll review eight dividend stocks that sport a dividend yield of at least 8%. These companies maintained their payouts during the financial crisis, and they appear poised to continue delivering generous dividends over at least the short- to medium-term.
To be clear, these are still “reach” candidates. They need to be approached with caution. Only more aggressive income investors who are willing to tolerate higher risk should consider these stocks. But in moderation, they could do well as a smaller part of a will-diversified dividend portfolio.