The Only Way to Avoid Dividend Cuts [Podcast]

 

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Dividend cuts are terrible and frustrating. With all the uncertainties around the market, dividend safety is more important than ever. However, avoiding dividend cuts is much more than receiving a constant quarterly payment. Today, we’ll discuss the only way to minimize them.

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You’ll Learn

  • A company that pays a dividend for many years is one thing, but if that dividend doesn’t grow, it is far from safe. There is a big difference between a dividend payer and a dividend grower. Looking a the dividend growth trend is the first way to minimize dividend cuts.
  • What type of dividend growth should investors target for a healthy portfolio?
  • A high yield can be a sign that something is wrong. The stock price depends on the demand for this stock. More often than not, less demand = higher yield. Why is the stock less in demand?
  • Not all high-yield stocks are bad. To avoid cuts, Mike built a quick checklist to ensure their dividend is safe.
    • Has the company increased its dividend in the past 5 years? Is the dividend growth trend steady or slowing down?
    • How are the payout ratios: above 100% or under control? What’s the payout ratio trend?
    • Is there an explanation for a high payout ratio? (Are you using the right calculation?)
    • Is the business growing or struggling? How are their EPS and cash flow trends
  • At Dividend Stocks Rock, we have a Dividend Safety Score that helps our members and us avoid dividend cuts. Investors can build their own too. To inspire listeners, Mike describes our own DSR rating.
  • Does that mean we should sell a stock showing a poor rating? Mike gives two examples of stocks with a poor Dividend Safety Score that he’d sell and two that he’d keep.

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This podcast episode has been provided by Dividend Stocks Rock.

The post The Only Way to Avoid Dividend Cuts [Podcast] appeared first on The Dividend Guy Blog.

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