A good screener can do half the work for you.
Finding a great dividend stock is about more than just finding
the stock with the biggest yield. Sure, when dividends are your focus, the
dividend yield is the most important metric. But there are a number of other
factors to consider.
For example, you might find a stock paying a great dividend
today. But if the company isn't generating the free cash flow it needs to fund
its dividend, it might be forced to cut its dividend tomorrow. (In which case,
you'll be stuck owning a not-so-great dividend stock -- and probably one whose
stock price is plummeting, as other investors flee the falling dividend).
Of course, if falling dividends are bad, then growing
dividends must be good. In that case, you might also look into a dividend
stock's payout ratio. This metric expresses, as a percentage, the dividends a
company pays relative to the earnings it uses to pay them. A stock with a 100%
payout ratio may be "maxed out" and financially incapable of growing
its dividend. Conversely, a dividend stock with a payout ratio of 50% might
still have room to grow its dividend over time.
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