A common mistake many investors make when looking for dividend stocks is to focus mainly on the yield.
A high yield can be enticing, but if it proves unsustainable, it could turn out to be a costly decision
Not only might the dividend get cut or suspended, but the stock may also crash if that happens. Three dividend stocks that may be underrated due to their low yields but that could be incredibly reliable income investments to hang on to in the future are Microsoft (NASDAQ: MSFT), Eli Lilly (NYSE: LLY), and Mastercard (NYSE: MA). Here’s why you should consider buying these stocks for their payouts, even though their yields may look minimal.
Microsoft Most investors probably aren’t buying Microsoft for its dividend; it yields just 0.9%, which is below the S&P 500 average of only 1.1%. But while the yield may look unimpressive, consider that Microsoft has actually been a top dividend growth stock for years. Currently, it pays $0.91 per share per quarter.