The search for yield remains one of the biggest concerns for investors. Finding yield in a world of zero interest rates is a daunting task, especially given the five-year advance in the equity markets that has pushed prices of many assets to somewhat unreasonable levels. Many of the usual dividend stocks have seen enormous rallies over the past few years and are no longer candidates for purchase. The most dangerous activity in the market for many investors is yield chasing and accepting higher risks to obtain higher rewards.
The Altman Z-score is a measure of financial risk developed by Professor Edward Altman of New York University. Companies that score 2.99 or higher using this measure are considered in the safe zone with little financial or liquidity risk. We can combine the enterprise-to-EBTIDA ratio with the Altman Z-score to look for stocks that have high yields and are safe and cheap for income investors: Royal Dutch Shell (RDS.A), Sturm, Ruger & Co. (RGR), IDT Corporation (IDT), When looking for dividend stocks, make sure you consider the price you are paying and look to buy only stocks sitting at cheap values. In addition, make sure that your dividend stocks have the strong financial condition needed to survive through any market or economic cycle.
Source: InvestorPlace
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