What is a dividend and how does it work?

A dividend is a portion of a company's profits paid out to shareholders, usually in cash. When you own dividend-paying stocks, you receive these payments regularly (often quarterly) regardless of whether the stock price goes up or down. It's like earning rental income from a property you own - the company shares its profits with you as a reward for being an investor.

What is dividend yield and why is it important?

Dividend yield is the annual dividend payment divided by the stock's current price, expressed as a percentage. For example, if a $100 stock pays $3 in annual dividends, the yield is 3%. This helps you compare the income potential between different investments. However, as the Fortress Dividends theme emphasizes, extremely high yields may signal financial trouble, while moderate yields from financially healthy companies often provide more reliable income long-term.

What are "Dividend Aristocrats" mentioned in the SDY description?

Dividend Aristocrats are elite companies that have increased their dividend payments to shareholders for at least 25 consecutive years. This remarkable track record demonstrates exceptional financial strength, consistent profitability, and a strong commitment to returning value to shareholders. These companies have proven they can maintain and grow their dividends even during economic downturns, making them particularly attractive for income-focused investors.

How do ETFs (Exchange-Traded Funds) work with dividends?

ETFs like those featured in this theme hold baskets of dividend-paying stocks and pass those dividends on to ETF shareholders. The fund collects all the dividends from the companies it owns, and typically pays them out to you quarterly. This gives you instant diversification across many dividend payers in a single investment. The ETF's management fee is deducted before distributions, but these fees are usually modest compared to the convenience and diversification benefits.

What makes a company a "financial fortress" for dividend investors?

A financial fortress company typically has several key characteristics: a strong balance sheet with manageable debt levels, consistent cash flows that easily cover dividend payments, a history of maintaining or increasing dividends over time, and a business model that remains essential even during economic downturns. These companies prioritize financial stability and shareholder returns over aggressive growth, making them more reliable dividend payers when economic conditions deteriorate.

15 handpicked stocks

Fortress Dividends

Discover companies with rock-solid financial foundations that deliver stable, dependable dividend income. These carefully selected stocks have been chosen by our investment experts for their ability to provide reliable payouts while maintaining strong balance sheets.

Han Tan | Market Analyst

Published on June 17

Top Picks from This Group

Here are a few of the assets in this group. Create an account to unlock the full list.

Core High Dividend iShares

HDV

Current price

$116.93

This ETF tracks high-dividend paying U.S. stocks that are specifically screened for superior company quality and financial health.

PowerShares S&P 500 High Div Low Vol ETF

SPHD

Current price

$49.77

This fund focuses on S&P 500 companies that offer a combination of high dividend yield and low volatility, indicating financial stability.

Franklin U.S. Low Volatility High Dividend Index ETF

LVHD

Current price

$40.08

This fund provides exposure to high-yield companies that also exhibit low price and earnings volatility, a key marker of stability.

S&P Dividend SPDR

SDY

Current price

$139.38

Invesco KBW High Dividend Yield Financial ETF

KBWD

Current price

$13.14

BLACKROCK ENHANCED EQTY DVD

BDJ

Current price

$8.99

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About This Group of Stocks

Our Expert Thinking

These companies represent financial strongholds capable of weathering economic storms while delivering consistent income. We've focused on mature businesses in essential sectors like consumer staples, utilities, and industrial manufacturing, known for generating stable cash flows from indispensable products and services.

What You Need to Know

This collection prioritizes the security and reliability of dividend payments over chasing the highest yields. High yields can sometimes signal financial distress, but these selections have been screened for manageable debt levels and consistent profitability, creating a defensive anchor for your portfolio.

Why These Stocks

Each company was selected through a rigorous screening process evaluating not just dividend yield, but also balance sheet strength and profit consistency. In times of economic uncertainty, these dependable, cash-generating businesses often experience increased demand as investors seek quality and reliability.

Why You'll Want to Watch These Stocks

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Steady Income Machine

These companies are designed to deliver regular dividend payments regardless of market conditions, creating a reliable income stream you can actually count on.

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Economic Storm Shelter

When markets get rocky, these financially resilient companies often shine. Their strong balance sheets and essential services provide protection during uncertain times.

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Compound Your Wealth

Reinvesting these dependable dividends can potentially accelerate your wealth growth through the power of compounding, especially in today's yield-hungry market.

Get the full story on this Basket. Read our detailed article on its risks and potential.

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🆓

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