High yield stocks can be used to lessen volatility of a portfolio, as a defensive play during a bear market, or just as general diversity. But before choosing a high yield stock or issuer, do your homework. As with any other area of investing, not all issuers are created equal. With a little bit of research you'll be able to make an informed decision and informed decisions are much more likely to be wise decisions yielding positive results.

There are a few tips that seem to serve as good guidelines for high yield stock investments. For one, take a look at other stocks in the same industry as the one you're looking at. How does it compare and contrast? Is it very much more expensive than the other high yield stocks in that same industry?

How does the stock's balance sheet look and how has it performed throughout history? These are definitely some basic, yet continually important aspects to be sure you take a look at before deciding on a particular high yield stock.

Obviously a company's dividend track record can reveal many viable tidbits of info, and so can the state of a company's payout ratio. The payout ratio is dividends paid as a percentage of earnings. This is a key indicator of a business's ability to maintain its dividend.

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