As an old investing adage goes: Investors have lost more reaching for yield than at the point of a gun. That may sound a bit dramatic, but when you think of all the yield trap stocks — high-yield dividend stocks whose big losses have offset their big quarterly payouts — you can embrace this Wall Street maxim as a warning not to focus only on dividend yield while disregarding other important factors such as future growth prospects.
This holds true for healthcare stocks offering high dividends as well. Yet while there may be some high-yielding healthcare stocks that are more value trap than generational buying opportunity, don’t assume that means a high dividend yield is always a red flag.
At least, that’s the case with these three companies. Each has a high yield and a poor near-term track record of price performance, but may prove a worthwhile buy at the current price.
This post originally appeared at The Motley Fool.