Companies need capital in order to run their operations. Because of this, they raise money either through equity (issuing shares) or through debt financing (bonds/loans). However, raising money isn't free. There is a cost of issuing debt, and a theoretical cost of issuing equity. WACC is a weighted average of cost of debt and equity. It is an important calculation for valuing stocks because a company's WACC is often used as a discount rate for valuation.
If you do some searching for dividend stocks, you may find stocks that have dividend yields of 15% or more. To a beginner investor, stocks like this may seem like a bargain. However, it is often the case that the dividends for these high yielding companies are unsustainable and only high because the price of the stock has dropped due to poor fundamentals. There are a few ways to check if a dividend is safe, and this post will teach you just that.
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