Part 8/10:
Diversification is critical in constructing a robust dividend portfolio. This can involve selecting companies from varied sectors, incorporating domestic and international stocks, and blending high-yield dividend stocks with growth-oriented investments for balanced risk exposure and income generation.
Yield Traps and Dino Stocks
Be wary of yield traps—stocks that appear enticing due to high yields but may be underlying financial issues, which could ultimately hurt your long-term investments. Understanding the fundamentals of companies, such as cash flow and debt levels, can prevent entering this trap. Also, identifying "dino stocks"—companies that may pay a dividend but do not provide meaningful income—can help refine your portfolio focus.