Income Stock

Income stocks are stocks that are noted for their high dividend yields. An investor who invests in income stocks is usually interested in capital preservation and expects most of his gain to be from dividend income.

Income stocks are usually big established companies that generate large amounts of cash and can therefore pay their shareholders large dividends. However, an income stock can go into decline, which may lead to dividends being decreased or even eliminated.

Income stocks can come from any industry, but are most commonly found as companies operating within real estate (through real estate investment trusts, or REITs), energy sectors, utilities, natural resources and financial institutions. However in the 2008 financial crisis, we saw bank after bank slash dividends as their need to preserve capital was greater.