Analyzing, rating and selecting dividend stocks can be difficult and time-consuming. The question is how do you prevent mistakes when you are searching for attractive dividend stocks?
High dividend payments are great, and dividend growth stocks are probably better, but dividend cuts are definitely a risk to avoid. Not only the dividends are cut, but also share price fall well ahead of the dividend cut, and often fall even further when dividends are suspended. General Electric (GE) and Deutsche Bank (DB) are typical examples and events that will be remembered by many investors.
By analyzing the dividend growth trend, you probably will get an idea if the company can keep up with its dividend policy. Adding other metrics such as revenue, earnings, payout-ratio, cash flow, and debts will tell you if the dividend is sustainable.
Our Smart Dividend Score system is designed to help dividend investors, to identify strong companies with a sustainable dividend and avoid companies that could be riskier to invest in.
Interest articles to read in your quest for quality dividend stocks are:
- How to score dividend stocks and assess dividend safety?
- Why are dividends important?
- High dividend stocks.
- The power of dividend and the compounding effect
- Investment metrics and ratio’s
