It’s always good when a company decides to distribute its profits to shareholders in the form of a dividend, and it’s especially nice when that payout translates to a healthy yield. But for investors — especially young ones looking for long-term income investments — the sustainability of said dividend is paramount. Let’s break down the data that can help you decide whether a stock’s dividend can keep chugging along or if a cut is on the horizon. We’ll also shed some light on a few important exceptions.
The quickest back-of-the-napkin calculation to decide whether a dividend is sustainable is called a “payout ratio” — the relationship between the company’s annual dividend payout per share and the company’s annual earnings per share. The important part of that equation for sustainability isn’t the yield, though — although the yield is often a good clue; I find that anything north of 6% or so is worth a closer look. A stock might boast an outsized yield because the share price has fallen dramatically, the company paid a special dividend or because it is trying to make up for a lack of organic growth.
Source: InvestorPlace
Related Articles:
- 9 Dividend Stocks Beating The 4% Rule
- How To Buy Dividend Stocks At The Bottom
- 8 High-Yielding Dividend Aristocrats Not Afraid to Raise Their Dividends
- Three Keys For Successful Dividend Growth Investing
- 12 Dividend Stocks With A Quick Payback
How to Tell Whether Your Stock’s Dividend Is Sustainable
Posted by D4L | Monday, October 14, 2013 | ArticleLinks | 0 comments »________________________________________________________________
Subscribe to:
Post Comments (Atom)
Dividend Growth Stocks News
~
Popular Posts Last 30 Days
-
If you're worried about inflation rearing its ugly head next year, you should probably worry about more likely catastrophes, such as bei...
-
As a relatively new blogger, the one thing that has stood out in my mind is the number of Canadian bloggers in the areas that I am most inte...
-
We screened our 24/7 Wall St. dividend equity research database and found 5 stocks that combined can generate over $3,000 of annual passive ...
-
The stock market has been on an upward path of late, with some of the most prominent stocks hitting astronomical highs. The dividend yield o...
-
Dividend growth stocks can be incredibly attractive investments if you crave recurring income. As these types of stocks raise their dividend...
-
The most dependable dividend stocks typically have a long track record of sustaining payouts through different market cycles. Companies with...
-
Dividends can be a tremendously powerful part of your investing strategy. Not only can they give you a continuing source of cash to reinvest...
-
In my opinion, there are three criteria investors should consider when evaluating a particular stock for their portfolio. The first is histo...
-
In this article, we discuss 5 best March dividend stocks to buy. If you want to read our detailed analysis of dividend capture strategy and ...
-
As the broader stock rally broadens to some of the more “boring” corners of the market, it’s the higher-yielding dividend plays that could s...
0 comments
Post a Comment
Post a Comment
Note: Only a member of this blog may post a comment.