Dividend Safety Signs and Warning Flags

by Maria Crawford Scott

Dividend Safety Signs And Warning Flags Splash image

Many investors have sought shelter from the stock market storm in more mature dividend-paying companies, since the income from these firms provides at least some positive return in an otherwise bleak environment.

But the economic downturn has tested even the most mature and stable firms, with some forced to cut dividend payments. Others have managed to maintain current levels for the time being, but could be forced to make cuts in the future.

What signs can you look for that indicate the safety of a company’s dividend payment stream?

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Maria Crawford Scott is the former editor of the AAII Journal.


Jeff from Illinois posted over 3 years ago:

Your "download printable PDF" link doesn't seem to be working "Error Loading Page." Windows XP, Firefox Ver. 3.6.8

Robert from Virginia posted over 3 years ago:

No discussion board on this question.

What do you do when you have spent years developing a DRIP portfolio and companies such as BAC, C, no longer have a dividend but the price is too low to sell? Others such as GE have cut their dividends in half but the price is too low to weed them out of the portfolio as well. Is this worth a journal article? I believe it is. In the meanwhile would you please share with me on an individual basis? I really need the help.

Douglas from Pennsylvania posted over 2 years ago:

Stocks like this you sell as soon as they cut the dividend or it looks like they are going to cut. I owned all three of these stocks and sold all. C and BAC I sold when in the 30,s when there was a lot of discussion about them cuting. GE I sold when they cut even though there was a lot of talk they were going to cut. Instead I listened to that lying jerk Jeffrey Imheld who kept saying they would defend the dividend up to the day they cut.

James from New York posted over 2 years ago:

This article has been very helpful. I realize that all of that data needed is available from the company's latest 10-K report and prior year reports. My question is whether there are any online resources that publish such data gleaned from these reports?

Michael from California posted over 2 years ago:

Morningstar....Scottrade has this stuff as well.

Larry from Georgia posted over 2 years ago:

Great article! Douglas, thanks for naming names, i.e., Imelt...fabulous! With you 100%.

Just now beginning to get into dividend stock investing, very late in life. Was turned on to it by an article by David Knapp (not sure of last name) from Seeking Alpha. I'm one of those who have some sort of nest egg total and now I'm trying to figure out how to generate income without "amputating" my investments altogether. The idea of selling stocks, etc., in order to supplement my SS and rental property income is not sitting well with me. Onward!

Carlton Boyles from North Carolina posted about 1 year ago:

This article is ver basic and helpful for a beginner investor.

Dennis from New Jersey posted about 1 year ago:

Steve Selengut has an excellent book on income investing. Pretty safe and very good income using a mix of CEFs and Investment grade dividend equities. Check Amazon or Google books for a preview of his book.

Michael from Connecticut posted about 1 year ago:

This a good article that makes a lot of investment sense, yet it lacks practical knowledge of how to actually obtain the information needed to calculate some of these ratios. For example, where does one go to easily obtain the information about Dividend Growth Rate over the past 5 years?

Richard Lund from Washington posted about 1 year ago:

I let Vanguard do the picking for me. They have far more expertise than I ever will. The don't charge much.

R N M from California posted about 1 year ago:

As always the devil is in the details or in this case the ticker. Let's see some practical application of these principals with stocks/industries in the news.

James Skaggs from California posted about 1 year ago:

Looks like the real money in dividends is in REITS

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