When Chasing Yield Goes Wrong

One of my favorite skits from Chappelle’s Show was “when keeping it real goes wrong.” In this article, I am going to cover: When chasing yield goes wrong and how to chase yield the right way.
There are two high-yield stocks that have been in the news recently, which show why chasing yield is risky. Those two companies are CenturyLink (CTL) and Uniti Group (UNIT). It is not just those two companies. Other popular companies that cut their during dividend the past year were CBL & Associates Properties (CBL), General Electric (GE) and Anheuser-Busch InBev (BUD) and the list goes on. If you look at the comments streams on these companies, many are filled or were filled with comments about those companies being a source of income. That is fine, however with a higher yield comes higher risk.
Three methods to avoid big losers
If you own individual stocks, especially within the high-yield space, you run the risk of having some big losers. The following three methods can help in weeding out potential big losers from your portfolio or keep you from getting into big losers in the first place. If you are looking at a company that has large short interest, a very high yield and dividend sustainability is a question, run away! We are in one of the strongest economies in years and there are many less risky choices available than these types of ultra high-yield stocks.
Look at short interest
One simple test too weed out high-yield stocks is to avoid stocks that have high... Read more