Generating a passive income in retirement does not need to be a particularly time-consuming event. In fact, there are a wide range of dividend stocks available that could offer the chance to earn a growing second income over the long term.
By investing in mature industries that reward shareholders, as well as reinvesting dividends received where possible, it may be possible to enjoy financial freedom in older age.
High-yield stocks:
- While it may be tempting to simply buy the highest-yielding stocks you can find at any given moment in order to maximise your income return, doing so may not be a shrewd move. That’s because some stocks may have high yields due to them enduring a challenging period that has caused their market valuation to decline.
- This could be because of weak industry operating conditions, or a poor strategy being employed by the business. Whatever the reason, avoiding value traps could be a worthwhile move for dividend-seeking investors, since it may be possible to obtain a better risk/reward ratio through buying stocks that offer greater sustainability over the long run.
- As such, contemplating a company’s financial strength, strategy and how its industry outlook compares to those of other sectors could ensure you buy high-yield stocks that offer favourable outlooks.
read more
