To earn long-term passive income, we need to look for a stock with a high , right? Well, a high yield means more income. But no dividend is guaranteed, so we need to take care. For example, earlier this year the forecast dividend was up at 7%.
But my Motley Fool colleague Stephen Wright wrote that “ “. A few days later, the company posted an update saying that “ ” The yield dropped to zero percent. And telecoms giant had been offering a fat 10% dividend, but it slashed it by half for next year.
Cut the risk How do we minimise the risk of this kind of damage? I see two key ways. One is through , putting our money into a range of companies in different sectors. Imagine having all our money in banks when they slashed their dividends in the 2020 stock market crash, for example.
We don’t want that. My second approach to reducing risk is to seek companies that are in solid long-term businesses. Ones that don’t need huge amounts of capital expenditure, and aren’t led my fashion and fickle sentiment.
My example today is ( ), the investment manager, with a forecast 8.8% yield. Finance risk An investment like this is clearly not without risk, and it can be hurt by poor economic times.
Just look at the above chart to see how the last few years of high inflation and interest rates have hit the abrdn share price. The company did drop its dividend by a third in the 2020 crash year. But it kept it going each year since.
And with the share price down, I think it could be a stro.