How to know if your dividend is safe
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- Опубліковано 24 вер 2022
- In times of economic distress, dividend investors often ask the question: is my dividend portfolio safe? Not all dividend companies perform well during economic downturns or recessions. ETFs or index funds focused on dividend growth are not always immune to dividend cuts. Even VIG the dividend appreciation ETF from Vanguard cut its dividend during the great financial crisis of 2008-2009. In times of high market volatility, there is no wonder people are asking "Is my dividend safe?" or "do you think company x will cut their dividend?" When looking at dividend safety of a company, I generally look at the following criteria:
(1) Dividend history is important (but only tells half the story) 6:25
(2) Does the company have a MOAT 9:41
(3) Understanding Earnings Per Share (EPS) 11:18
Comparing MSFT vs IBM 12:23
Comparing WM vs MMM 28:10
comapring SPGI vs BEN 33:09
(4) Dividend payout ratio fluctuation
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#DividendGrowthInvesting
How do you know if your dividends are safe?
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Dividend Reinvestment Calculator:
docs.google.com/spreadsheets/d/1W8UvXLZdEpVX-UPTKiHIT1oYIkj7Omvf30FgB3FTKWY/edit?usp=sharing
5 things I look for: dividend and revenue growth history, dividend payment history, dividend payout ratio below the industry average, industry growth, and company moat. Just a little different than you mentioned. Sweet video buddy
You got your eye on the prize! You could add like 10 other things and still be blindsided by either the management at the company or some unforeseen global event.
@@DividendGrowthInvesting for an unforeseen global event, I check to see if the company raised dividends during the last 3 disruptions: 2020 08 and 01. If they cut or didn't raise during one of those, it's a warning sign to investigate for me 😎 gotta love the digging
I needed this video. I appreciate you sharing your mindset.
This video's "probably feel a little like this" was one of your best so far! 😂👏👌
lol!!! A true masterpiece
Nobody has a crystal bowl...That's what I know. Not Jim "lying" Cramer, not Warren "I will stay rich" Buffet, nobody. That's what I learned since January of this year.
No one can predict the future!
It’s ball as in crystal ball, not bowl…
@@macdavid9986 Mine is a crystal cube😅
Ball
"General Electric can really see some resistance." *badum tsss*
One thing I just don’t get about every UA-camr who uses M1 Finance.
Why not just leave the autoinvest ON? And just remove the “pies?”
The power in using M1, is setting the portfolio allocations (5% O, 15% AAPL, etc.) and letting the software do the rest. Appropriately buying up assets that are at a discount to your other holdings, either from dividends or deposited funds.
Otherwise you’re better off using a brokerage like Robinhood where you can specify the price and utilize options.
I’m long SCHD, VOO, SCHB, XLE. With some dividend stocks added to fill in the 3, 6, 9 12 payout on the index funds.
great!!
Great input as usual, thanks Jake!
Thank you!!!
I think another good thing to look for is what the percentage of free cash flow is payed out as dividends. If it is a higher percentage of free cash flow, it could be risky.
Yup!
I'm only investing in VTI, KOMP, VEA, VWO. (and a 50/50 taxable account with VTIP/STIP, TFI/MUB, AGG, BNDX, EMB).
Times have changed so fast. A year ago people would call you crazy for investing in bonds. No one can predict the future!
Great stuff, as always!
Hey Luke! Glad it was helpful!
Great vid! as always. I like Dgro and vym but I see that there is 63% fund overlap. What would be the use case to owning both or would be a good idea to own one of them?
I like both abs own both :)
IBM today reminds me of Sears in the late 1990s.
The good old days. They did have fun holiday music in their stores lol I remember that.
Fantastic thanks for this 👍🏻👍🏻
Thanks for watching!!
Would love to hear your thoughts about the JNJ Kenvue spin-off and Prologis and Duke Realty merger in a future video. Keep up the great content!
It’s annoying when these spin offs happen. I don’t mind the mergers as much because it’s under one ticker. I personally prefer these spins don’t happen but it is what it is.
Interest in seeing analysis for VZ. With Div at 6% and low payout ratio, but slow growth and high debt…bargain buy or value trap?
Hard to say.. but I do like how they have managed to control their payout ratio. Traditional telcos seem to always have a lot of debt. Not a company to bank on growing faster than the SP500 over the next decade. But the current dividend yield is attractive.
Great vid! Thanks. Does Seeking Alpha have ROIC?
I’m not seeing it at first glance. Let me see if I can find it. Otherwise you’d just divide the two fields.
@@DividendGrowthInvesting thank you for checking! I'm going to sign up for the free trial when I'm at my PC, so I can hunt for it too.
I see people diving out of stocks to short term bank savings. I like to buy stocks, hold, buy at value, keep. Those that move around lose the cost averaging.
It depends I guess on your time horizon and risk tolerance. The market tends to flip fast in both directions, so timing can be very difficult. I guess the key is to not be 100% in or out at any given time.
I'm one of the people switching some money to i-bonds but it's only my emergency fund, which was in a high yield savings earning under 1%.
But you're right, this is the worst time to switch from stocks to bonds
@@dustindodge5974 can you liquidate from I-bonds and get your money fast, like withdrawals from a checking account or have to wait a few days. I’m sure there are penalties but liquidity is needed for emergencies.
@@DuncanCunningham I don't need to liquidate. I have almost 2 year's expenses in emergency savings. Less than half is I bonds. Even my HYSA money takes a few days to receive.
Thank you for the awesome content, will you do one with REITs in the future?
That's the plan!
@@DividendGrowthInvesting this is very exciting:)
Also what is your take on IRM ?
Yeah I second this. I own schd and 10 REITs so I hoping to see if I'm probably safe.
I’m just starting the video, but episode idea for next week: defensive blue chips dividends and their past performance during a downturn.
It seems that blue chips do better than a index fund in a downturn, but interested to hear your analysis. I’m watching Visa, Microsoft, Apple and Costco.
Really great idea for a future video!! I personally would only be focusing so heavily in defensive stocks, if you have a very short term time horizon. If you have a long-term time horizon, I personally would be dca down into great names with future growth potential. Is offence the best offence or is defense the best offense. Each person has to decide for themselves.
One for reits please. ❤
It’s a trick question that’s never going to be
Do you think $MPW and $VZ keep paying their dividend without a cut?
Based off their EPS and payout ratio, I don't see a cut for VZ anytime soon. When looking at MPW, their FFO/Price is really attractive. The FFO/share is growing. The stock has been cut by 50%.... Their FFO/share is not dropping by 50%. Just my opinion don't blindly listen to a random stranger on the internet.... but I see massive opportunity with MPW.
Didn't you have like 30k not long ago?
:D time flies!
Why not just invest in SCHD or similar ETF and be done with it? The advantage of doing all this research and time seems to not be worth the extra few percent you "might" get in the long run.
To each their own. I personally think most people would be better off going the easier path of focusing on index investing. However, I feel it doesn't hurt to educate yourself on why dividends are cut and what to look out for if you did decide to invest into individual stocks. I would not be surprised though to see SCHD cut its dividend in 2023. I still believe SCHD is the best overall dividend ETF out there :)
@@DividendGrowthInvesting I agree, but time is more important to me then chasing the next good stock picks. I'm retreating from stocks, except the good ones. Still DCA, but in set forget mode.
@@DividendGrowthInvesting why would it cut in 2023? What metrics make you think that?
@@lukesemail6980 The index that SCHD tracks looks at dividend growth of the last 10 years. We’ve been in a bull market for 13 years. Companies that cut their dividend during the last financial crisis are included in the index today. The market had a massive pull forward in earnings. In 2023, you will likely see a retraction in earnings and dividends paid. But the good news…. Once we come out on the other side, e.g. a few years down the road, SCHD should (I believe) come roaring back. Lol but I could be completely wrong.. gollum stole my crystal ball.
@@DividendGrowthInvesting all fair points!
If you happen to find any of those crystal balls, let me know. ;-)
It’s like they live for failure
First!
there he is!!! :D
You Lost 70k, more than 10 per cent and you Make tutorial videos on investing? What am i missing?
You’d lose 50%
"lost" is a misunderstood word in this context.
Dividends are continuing to increase. Stock prices have little to no connection to dividends paid. Low prices are stocks on sale. This is a prime time to purchase stocks at a discount price.
All the markets are down. It's unrealized loss as long as you don't see!
should have been sell!