"Dividend investing is tricky business. On the one hand, investors looking for yield are enticed to consider the highest-yielding names in a given group. That said, as a stock's overall dividend yield rises, its risk profile inherently rises. Any time an investor sees a company with a double-digit yield or something outside of what most would consider to be a "normal" range, it's probably a company that's at risk of a dividend cut or further downside. That's what the market is saying at least."
"That said, investors looking for high yields do have the option of investing capital today in companies that continue to grow their dividends over time. A company that pays a 5% yield today, for example, that grows its dividend at a 7% annual rate will see its distributions double roughly every decade. So, in theory, an investor who locks in such a yield in a company that fits this profile could be generating a 10% dividend a decade down the road,"
Dividend investing involves a tradeoff between yield and risk, as exceptionally high yields often reflect elevated risk of cuts or price declines. Companies that consistently grow dividends can convert moderate current yields into much larger yields over time through compounding. A 5% yield growing at 7% annually will roughly double distributions every decade, producing about 10% in ten years and 20% in twenty, assuming consistent increases. Fortis is a Canada-based utility serving over three million customers across Canada, the U.S., and the Caribbean. Fortis has raised its dividend for 51 consecutive years at 5%–7% annual increases and maintains a strong balance sheet.
Read at 24/7 Wall St.
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