Strong companies plus juicy payouts equals some great dividend stocks
Big dividends. And I mean really big dividends. Yields that
are multiples of the average of the members of the S&P 500 Index. But big
dividends are worthless if the companies behind them aren’t up to sustaining
them, or if the dividend stocks aren’t working in the market. A dividend yield
won’t be worth much to anything on dividend stocks that are lagging or tanking.
Investing for dividend income takes work researching
companies — both their income statements and their balance sheets. As a former
banker and bond guy — I have always been about balance sheets as just as
important as income statements.
Income statements cover the revenues from products and
services, and investors get all excited about growth expectations. But for me,
it also comes down to operating margins. Sales are great, but not if a company
loses more than what they generate in revenue. And of course, problems will
happen. So, I look at what will happen to either impact sales or costs. And in
turn, I work through how the company has or will cope.
Balance sheets are crucial, as without credit, even the best
product idea won’t make for a great company that’s headed into receivership.
And earlier this year with the Covid-19 mess including lockdowns, the status of
companies — including their operations, their suppliers and customers — was
critical to analyze. But so, too, was the debt and credit of the companies, so
that they could power through even the worst parts of the Biblical plagues that
might be striking their core businesses.
The following big dividend stocks have been vetted by me and
I’ve been recommending them for some time. And that time includes both good and
bad conditions — so the dividends are sustainable.
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