When choosing a stock for its dividend yield you are going to want to look at the historical performance of that stock’s dividend payouts. The dividend yield of a stock will typically move back to its long term average, so if you have a stock with a 6% yield now but a historical average of 4% you can expect the dividend yield to drop over time. Conversely a stock with a 2.5% yield now but a historical average of 5% will likely see an increase in the dividend yield over time. Therefore looking at two stocks at a single point in time, one with a 6% current yield and the other with a 2.5% current yield may not be representative of what you can expect over time.
In addition to looking at historical trends, when assessing a company’s ability to pay dividends over time it is important to look at their Free Cash Flow. This is a financial metric that shows you how much cash the company has to pay out dividends and invest in itself without seeking financing for growth. If over several years Free Cash Flow has shown a positive trend you can expect the company to be able to continue to pay dividends. If Free Cash Flow has been negative then the company will increasingly be devoting cash to paying off financing, straining its ability to sustain dividend payments.
Source: Investor Guide
Related Articles:
- 6 High-Dividend, Low P/E Value Stocks
- How Much Money Will You Need Before Retiring?
- The 2013 Dividend Achievers
- 5 Stocks With A Strong Cash To Dividend Coverage
- Dividend Stocks Are My Conviction
Dividend Growth Stocks News
- Want to Make $1,000 in Annual Passive Income? Invest $11,250 Into These Ultra-High-Yield Dividend Stocks. - The Motley Fool - 5/17/2025
- Bajaj Finance, Page Industries to Infosys: Here are 8 dividend stocks to trade ex-date soon. Check details - Mint - 5/17/2025
- 5 Worry-Free Dividend Stocks Investors Can Buy Now and Hold Forever - 24/7 Wall St. - 5/17/2025
- Dividend Stocks: Ashok Leyland, Havells India, LTIMindtree, among others to trade ex-dividend next week; Full list - Mint - 5/17/2025
- I asked ChatGPT to suggest 3 UK dividend stocks for further research. Here’s what it said - Fool UK - 5/17/2025
- Automatic Data Processing Inc. (ADP) Dividend Stock Analysis - 5/16/2025
- Air Products and Chemicals Inc. (APD) Dividend Stock Analysis - 5/9/2025
- Waste Management, Inc. (WM) Dividend Stock Analysis - 5/2/2025
- Wal-Mart Stores, Inc. (WMT) Dividend Stock Analysis - 4/25/2025
- Abbott Laboratories (ABT) Dividend Stock Analysis - 4/18/2025
How To Find The Best High Dividend Stocks For Your Portfolio
Posted by D4L | Tuesday, June 04, 2013 | ArticleLinks | 0 comments »________________________________________________________________
Subscribe to:
Post Comments (Atom)
0 comments
Post a Comment
Post a Comment
Note: Only a member of this blog may post a comment.