High Dividend Yield Stocks Being Bought by Company Insiders

At least by the sound of it, you'd think that high dividend yield would be an unequivocally good thing for your holdings. Sure, big fat dividend yields mean more immediate cash in your pocket. But remember, dividend yield is only a comparative measure. Calculated by dividing annual dividend per share by price per share, dividend yield is a ratio that shows how much a company pays in dividends relative to share price. If a stock takes a nosedive, dividend yield will consequently see a spike. So high dividend yield can often be a red flag, indicating very high risk ahead.

We took our pool of high yield dividend stocks with high liquidity ratios, and looked to see which of them were getting snapped up by company insiders. When a firm's executives are willing to put their personal piggy bank at stake to buy the shares of their employers, it's a good sign that they think dividend return outweighs the additional risk.

Source: Motley Fool

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