SPG - 2 High-Yield Stocks With Very Different Risk Factors
High-yielding dividend stocks may look like an attractive buy at first glance, but high returns are usually high for a reason -- there's a risk.
Every stock has its own unique risk factors. Market volatility, short or long-term headwinds inhibiting the company's ability to grow, or poor management decisions like taking on too much debt are just a few reasons a stock's dividend yields are high and thus, carrying risk.
Rather than steering clear of high-yielding stocks altogether, investors should try to understand the cause of the problem to determine if the risks are worth the reward. For example, New Residential Investment Corp (NYSE: NRZ) and Simon Property Group (NYSE: SPG) are real estate investment trusts (REITs) that are paying high dividend yields. Both REITs' high returns are being driven by very different risk factors. Here's what's happening with each.
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2 High-Yield Stocks With Very Different Risk Factors