Not all stocks that pay out dividends are created equal. Here's how to evaluate them for growth and reliability.
Hunting for yield but fearful of getting burned? Here are four key questions that will help you "stress-test" a prospective dividend payer. 1) What is the stock's current yield? To get that figure, divide the current annualized dividend by the stock price. Typically, the higher the yield, the greater the likelihood that a company won’t raise its dividend much or, worse, could cut or eliminate it.
2) What is the stock's dividend payout ratio? This ratio is calculated by dividing the annualized dividend rate by a company's annual earnings per share. In general, the lower the payout ratio, the more room a company has to raise its dividend. 3) What is the recent history of dividend changes? Plenty of companies pay lip service to being generous with dividends. But actions speak louder than words. 4) Are new threats emerging that could dim a company's profit and dividend growth? The 2008 financial crash was a "black swan" – a development that few people foresaw. But many threats to companies' fortunes develop more gradually.
Source: Kiplinger
Related Articles:
- 10 Dividend Stocks With A 10% Yield In 10 Years
- Free Cash Flow Payout vs. Dividend Payout
- 9 Dividend Stocks Trading at a Double-Digit Discount
- 6 High-Dividend, Low P/E Value Stocks
- How Much Money Will You Need Before Retiring?
________________________________________________________________
Subscribe to:
Post Comments (Atom)
~
Popular Posts Last 30 Days
-
The silver lining of the market sell-off in 2022 is that it has created plenty of dirt cheap dividend stocks that investors can buy now and ...
-
The S&P 500 recently fell into a bear market, defined as a 20% year-to-date drop, which has ramifications for dividend stocks. The good ...
-
Rising interest rates are good for banks because it allows them to charge more for lending services. However, if those higher rates squash h...
-
Through wars and recessions, terrorist attacks and pandemics, dividend stocks as a category have always generated positive returns, even dur...
-
Looking to take advantage of supply chain disruptions and inflation? With Europe shifting from Russian energy supplies, there has been a lot...
-
Many companies will see their interest expenses rise, but the ones whose management was savvy enough to lock in debt at fixed rates should d...
-
How long do you think the average stock gets held? Not very long, it turns out. Reuters calculated in June 2020 that the average holding per...
-
You can work for money. But you can also have your money work for you. One great way to make passive income is to invest in dividend stocks....
-
Stocks generally will offer the best cushion against inflation, especially the reliable high-yield dividend payers. First, stocks have a lon...
-
Earlier we looked at the RQ (Risk/Quality) ratings of individual stocks. This was a good start to help us understand the risk profile of a ...
0 comments
Post a Comment
Post a Comment
Note: Only a member of this blog may post a comment.