Reliable dividends & consistently high profits

Dusseldorf The idea sounds great: buy stocks with high dividends and low prices. This results in high dividend yields. These are calculated from the relationship between the price and the distribution: Assuming a company pays its shareholders one euro per share and the price is quoted at 20 euros, then a dividend yield of five percent is calculated.

For many companies, dividends are far more stable than corporate profits and share prices in the course of the ups and downs of the economy. Investors can take advantage of this effect. However, there are a few pitfalls to be aware of.

“High dividends and dividend yields with falling share prices are a bet by the financial markets that business models will change, corporate profits will fall and companies will be forced to lower dividends,” warns Commerzbank analyst Hürkamp. Investors should therefore primarily look at the reliability of the distributions.