If you are willing to choose some individual stocks for your portfolio, give extra attention to those that pay dividends. A company that pays dividends is likely established enough with relatively predictable cash flow to commit to a regular payout for shareholders. Better still, healthy, growing companies tend to increase their dividends over time.
When assessing dividend payers, don't just look for the fattest dividend yields. Those can be reduced very fast. The bigger the yield, the higher the possibility of a dividend cut.
Also, even with two healthy companies, if one has a lower dividend yield but is growing its payout more briskly, its payout may soon outstrip the other company's dividend.
It's important to look for solid dividend growth, too. Finally, consider the company's payout ratio, which reflects the portion of earnings that are being paid out as dividends.
If it's, say, 80% or more, then there isn't much room for significant dividend growth, and if it stays above 100% for long, the dividend might have to be reduced.
Attached you can find a compilation of the best dividend aristocrats that pay less than 80% of its net income to shareholders while having a solid balance between equity and debt. The total debt amount isn't bigger than the amount of equity.
30 Dividend Aristocrats fulfilled my criteria of which 7 yield over 3 percent. Well, that sounds great in my view. In the past we had harder times to find inflation adjusted investment targets.
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Here are the results...
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| 30 Best Dividend Aristocrats For 2016 Part I (Click to enlarge) |
