Did you ever wonder why some companies pay dividends while others don't?
There are several factors that influence whether or not a company pays a dividend and how much it chooses to pay.
While there are too many possible factors to list here, these are some of the most influential.
- Payout Ratio
- Debt Level
- Growth (growing profits)
- Economic Environment
- Busines Model
- Less need of investment
Dividend payments are very complicated. These are a few hundrets that pay dividends regular over decades. A fewer number of stocks have grown dividends over decades.
Income stability is one of the top factors in determining dividend policies. Specifically, established companies with stable, predictable income streams are more likely to pay dividends than companies with growing or volatile income.
Newer and rapidly growing companies rarely pay dividends, as they prefer to invest their profits back into the company to fuel even more future growth. And, companies with unstable revenue streams often choose not to pay dividends, or pay small dividends in order to make sure the payout will be sustainable.
It looks terrible to investors when companies are forced to suspend or reduce dividend payments, so most like to err on the side of caution when deciding to implement a new dividend, waiting for several years of stable profits before doing so.
I think that a comibation of dividend growth on a sustainable dividend output could give all interest groups of the company large benefits.
Attached I've compiled a couple of great dividend stocks with a big potential to hike dividends in the future.
Here are my 10 favorite stocks from the screen in detail...
Invest in the best! A great rule but hard to follow in my view. If you're an income investor looking to stabilize your portfolio, or just want a little extra cash, dividend-paying stocks are a often a great thing to own.
With interest rates still historically quite low, you can get yields that are more than three or even four times what a bank might pay.
But which dividend stocks are the best?
There are many great options, but I like to look for companies with a solid track record of paying and even increasing dividends, along with some potential for share price growth.
Attached are 11 dividend stocks that are worth a look right now. Which stocks from the list do you like?
Here are the results....
Everybody knows the brilliant investor Warren Buffett. He made billions out of pennies and became one of the most respected investors in the world.
Today I like to look deeper in the selection criteria and show you some stock ideas that might match his affords.
Billionaire Warren Buffett of Berkshire Hathaway seeks specific qualities in potential stock investments: an undervalued share price, an astute management, significant growth opportunities and a strong "moat" where the company can maintain a competitive advantage over its peers.
Those stocks have...
- Strong Cash Flows
- Little need for long-term debt (other than for purchasing other monopoly type businesses)
- Strong consistent upward trend in earnings and long-term price appreciation.
- Operating margins, net profit margins and return on equity are all above industry averages.
In addition, he wants to...
- Look for a history of increasing earnings for the company. The shorter term earnings trend (3-5 year) should be better than the longer term trend (5-10 years) taking the overall economic conditions into account. Buffett finds more success focusing on the longer three to five year averages as opposed to quarterly or yearly results.
- The company should have a strong and consistent return on equity that is achieved without excess leverage or tricky accounting.
Operating margins, net profit margins and return on equity should all be above the industry averages.
- The company should carry little long-term debt measured according to industry standards.
- Prefer companies that have been producing the same product or service for a number of years.
- Invest in companies that have historically used their cash flow in ways that benefit the company and shareholders. These can include stock repurchase plans, purchases of related monopoly type businesses or paying reasonable dividends.
- Prefer larger companies, 5 billion and up. They tend to have a longer track record of growth and are able to better weather any market downturns.
Let's take a look at five blue-chip giants that Buffett would have bought 40 years ago, but that still provide plenty of value, growth and income for nonbillionaires like us.
Here are some results that could meet Warren Buffett's investment criteria now...
Many individual investors count on dividend payments they receive for buying shares in certain companies. But with the S&P 500 Index yielding an average of only 2.1%, it is important income investors consider global stocks to maximize their total return.
Income-oriented investors, who focus only or primarily on the United States, are limiting themselves to one of the least dividend-rich stock markets to gain a secure income. This is not bad but abroad is also nice yields available which become higher when the dollar is falling one day. I believe that this will happen one day.
Attached, I've put a few high-quality dividend paying stocks from abroad that are listed in the United States. As of today, there are 886 foreign companies listed of which 398 pay a dividend. I cannot list of them here so I need to make a difference between them. I decided to list only stocks with a 2 billion+ market cap and a low forward P/E, expected earnings growth over 5% and solid debt ratios.
These stocks jumped into my eyes...
Growth is good especially when it comes on high-margin. Today I like to show you those stocks with the highest expected earnings per share growth for the next five years.
Each of the stocks has an operating margin over 15%. In addition, sales grew by more than 5 percent yearly in the past half decade.
Only 6 stocks fulfilled my criteria of which two paying yields over 6 percent. Attached you can also find a full list with more fundamentals. I hope it helps you do evaluate the stocks better.
Here are the results...
