You may have shopped at either McDonald’s Corp MCD or Nike Inc NKE in the last year. If so, you helped the companies raise their dividend payouts to investors.
Investing in stocks that pay a dividend can be a great way for people to secure a passive income stream. Both McDonald’s and Nike announced they would be raising dividend payouts to investors to $1.52 a share for McDonald’s and 34 cents per share for Nike.
What Are Dividends? Dividends are a way for companies to return value to shareholders. Typically, companies like McDonald’s and Nike that have strong cash flows are able to pay out a certain amount of money to anyone who holds shares.
The increase in dividends for Nike and McDonald’s brings their dividend yields to 1.1% and 2.3%, respectively.
While it’s great to own stocks that pay dividends, some investors advise against buying stocks just because they pay out a dividend. Additionally, a lot of up-and-coming names (like Apple or Amazon in the early 2000s) are unable to pay dividends while in “growth mode.”
Nike raised its dividend for the 21st consecutive year. Similarly, McDonald’s has raised its dividend every year since the 2008 financial crisis.
Benzinga's Take: Dividend stocks can be great to hold compared to other stocks in recessionary times. Even if the underlying stock depreciates, you are at least guaranteed some return.
Typically stocks that have strong cash flows and are considered “safer” stocks are the ones that pay dividends, while growth stocks typically do not have dividends.
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