The first key to dodging a dividend austerity crisis is ensuring your overall income-producing portfolio is balanced and diversified. The second key is to know your companies' exposure to an austerity crisis. I advise running the following checklist:
Revenue Reliability: Almost every stock took a bath in the market meltdown of late 2008. But companies that kept their sales steady during the crisis and the deep recession that followed have proven their ability to weather the toughest of times.
Payout Ratio Visibility: No dividend is sustainable without the profits to back it up.
Manageable Debt: A low absolute level of debt is preferable.
Source: Market Watch
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