The 3 Most Dangerous High-Yield Dividend Stocks

The 5%+ dividend stocks could yield more headaches and heartaches than profits.



Dividend stocks tend to be the foundation for most retirement portfolios. Investors have a bounty of reasons to choose dividend stocks over non-dividend-paying companies; the outperformance of dividend-paying stocks over the long-term relative to non-dividend payers is just one. Dividend stocks often have proven business models and clear long-term growth outlooks, and dividend stocks help hedge your downside during inevitable stock market corrections. Perhaps best of all, dividend payments can be reinvested into more shares of dividend paying stock. This process, known as compounding, results in a bigger dividend payment and even more shares of stock in a repeating pattern.

Ideally, dividend investors want the highest yields they can find for the least risk possible. This means finding high-yield dividend stocks -- generally stocks with a yield of 4% or higher -- that can be bought and held for a long period of time.

Unfortunately, not all dividend stocks were created the same. Some are harboring dangerous deteriorations in their underlying business models that provide investors with only a false hope of juicy returns. Here are three such high-yielding dividend stocks that I'd surmise are the stock market's most dangerous.


Continue to read at The Motley Fool to find out which stocks Sean Williams think to be the stock market's most dangerous high-yield dividend stocks…

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