¶ The Pitfalls of Dividend Investing
Dividend stocks can be an awesome way to generate Passive. income, build wealth, and even reinvest those dividends to unlock the magic of compound growth and I recently shared my top high dividend paying stocks in my four million dollar stock portfolio that I am planning to hold long term not only for dividends but also for capital gain. That said, it's important to remember that not every dividend stock is your ticket to the riches. Just like any investment, there are potential
Some stocks might offer high yields but come with higher risk or unstable financial. Others might have declining growth prospects or overvalued in the market. And then there is the personal side of investing. One stock that might seem financially awesome could have a company mission or practices that don't align with your personal values. So today I'm sharing three different stocks. that I personally won't be invested in. And yes, one of them might surprise you because it's not just
¶ Avoiding Financially Risky High-Yield Stocks
All about the numbers, it's about ethics too. So if you're ready to delve into the nuanced world of dividend stock investing and discover why these three stocks don't make the cut for me, keep watching and let's. Let's go. The first dividend paying company I will not be investing in is a stock that pays a whopping. 24% dividend yield? That's crazy high yield. And if you think it's a yield thirst trap, you're right. It is a financial services company in Warrider with a 360.
69 million dollar market cap called ORCID Island Capital Inc. The stock symbol is ORC. So why am I not investing? Let's start with the fact that this publicly traded mortgage week company currently only has three employees. That's too low for a publicly traded company, in my opinion. I mean, even my tiny company, InvestDiva, has almost 20 team members and our headquarters is my bedroom.
In my house. So when you look at Orchid Island Capital's business model, you'll find out that they're all about those government guaranteed home loans and they play the game of making money off the difference between what they earn and what they pay in interest.
They've got another company, Bimini Capital Management, handling their stuff. So they've got some fees going out to them. Now investors are drooling over their 24% dividend yield, but it kind of feels like it's a shiny trap. It's not like they're trying to scam, but sometimes things just go south, you know? If you're eyeing a stock and its overall return isn't even half of its yield, that's probably a watch out sign. No wonder stock price just
Has been going down since they first went public in 2013 while the rest of the market was going up. The second dividend-paying company I won't be investing in is another financial company that also pays a high dividend of around 16% and his stock price has just been dropping like hot over ninety four percent down since it started trading in the New York Stock Exchange back in 2009. Invesco Mortgage Capital A with a stock symbol IVR has a market cap of$400.
40 million dollars and has been dabbling in all sorts of mortgage-related stuff from government-backed home loans to commercial deals. But real talk, their fund strategy simply isn't working and it hasn't worked for a very long time, except for a brief period of time between 2016. Even with reinvesting those dividends.
Still down 61%, even though we've witnessed one of the strongest bull markets in the history during the same period. I consider this investment a yield trap and I'll be avoiding it like a play.
¶ Ethical Investment Choices and Personal Values
Sorry, Investgo, not sorry. Last but not least on my list of dividend paying stocks I won't be investing in is a company that's actually been called a hidden gem among dividends. Kings. It currently sits on a$74 billion market cap with a dividend yield of around 9.44%. It's an old company that has been through the thick and thin of the markets. Consistently growing since it first went public in nineteen sixty.
It has even been increasing its dividend yield payments. And while the stock was once a reliable growth stock, it's now dipping along. the broader market, making it more of a value way. But I will not be investing in it. Why? This company is one of the largest producers of products that directly contributed to my mom getting breast cancer twice.
resulting in a double mastectomy and lifelong psychological trauma. It also caused irreversible damage to my dad's lungs. I'm talking about Altaria Group Inc, M. Oh, the top tobacco manufacturer in the US. My dad was a chain smoker and my mom suffered as a secondhand smoker. When you invest in a company, you're basically supporting them and you become a part
owner of everything they do. So I can't in good conscience invest in a company that causes millions of people's health problems every single year. The cool thing is as more people become educated about harms of tobacco products and as letting those cigarettes continue to be less cool around the world, there's a good chance their market share won't.
What do you think of my picks? What did I miss? Are there any assets you will not be investing in either for financial or moral reasons? Let me know in the comments. And as always, make your money have babes.