Dividend stocks live and die by their ability to keep their dividend payments flowing and increasing. Companies that strain to pay their dividend can quickly run into problems. I analyzed a group of six stocks with some precarious situations to see how vulnerable the dividends of each of these stocks and explore how likely each could get cut in 2012.
One of the key elements to look at is the payout ratio: how much of a company's earnings are being paid out in dividends. For most companies, a payout ratio above 80 throws up warnings - it may be robbing operational capital to keep the dividend paid. Some companies, like REITs, are set up differently and have to pay at least 90% of earnings in dividends but can go higher, even over 100% for a short period of time.
Source: Seeking Alpha
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