NEW YORK ( TheStreet) -- It's hard to beat owning a high-yield stock. With other types of investing paying next to zero, equities continue to offer attractive yields.
Of course a high yield doesn't mean much in the face of a large capital loss resulting from a company board's decision to terminate future dividend payments indefinitely. Radioshack (RSH) presents a recent illustration of a "yield trap"; a stock paying a very high yield that is unsustainable due to a lack of earnings.
The most dangerous action an investor can take is buying a stock solely based on the yield. Sure, we all want to own high-yield stocks, but unless you take the time to perform the necessary due diligence, you will permit inessential peril and hazard to your portfolio.
In this article, you have an opportunity to review stocks that meet my recommended starting point for examination. Out of thousands of stocks trading, how does a company make it on this list?
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