Connect with us
Whether you choose to live off of those dividend payments or reinvest them to help grow your wealth and investing capital, monthly, quarterly or annual dividend payments are an added bonus for investors, but there are other reasons to be bullish when it comes to dividend investors.

archive

Dividends Offer Insight as Well as Income

Whether you choose to live off of those dividend payments or reinvest them to help grow your wealth and investing capital, monthly, quarterly or annual dividend payments are an added bonus for investors, but there are other reasons to be bullish when it comes to dividend investors.

Many investors are fans of dividends because of the income stream they provide. Whether you choose to live off of those dividend payments or reinvest them to help grow your wealth and investing capital, monthly, quarterly or annual dividend payments are an added bonus for investors, but there are other reasons to be bullish when it comes to dividends. For example, the ability of a management team to consistently pay a quarterly dividend points to favorable cash flow generation. Even better is what I discussed with you last week â?? dividend dynamo companies that have such strong business models that they can consistently raise their annual dividend. A great example of that is McCormick & Co. (MKC), which just raised its annual dividend for the 28th time.

There is another positive to dividends and dividend dynamo companies in particular. Before I get to that, I think youâ??ll agree that one of the hardest things in investing is how to assess what a stock you are eyeing is really worth. There are all sorts of valuation techniques and methodologies you can employ to determine that securityâ??s value. Believe me, after working with institutional investors for a number of years Iâ??m quite familiar with them: the price to earnings (P/E) ratio, the P/E to growth ratio, price to sales and enterprise value to earnings before interest, tax, depreciation and amortization (EBITDA). If what you are analyzing has a net cash balance sheet, you have to account for that in your calculations.

Another valuation tool you can use is dividends. More specifically, you can examine the companyâ??s dividend yield against the highs and lows in its stock price. For those companies that I recommend to subscribers of PowerTrend Profits and for positions I am evaluating for the Thematic Growth Portfolio that I oversee for Fabian Wealth Strategies, this is a mandatory exercise. By identifying prior peaks and troughs in a stockâ??s share price going back several years and the corresponding dividend yield, we can build an historical framework of peak and trough dividend yields for the shares.

Read more about using dividends to gauge the strength of a stock at Eagle Daily Investor.

Newsletter Signup.

Sign up to the Human Events newsletter

Written By

Chris Versace is a financial columnist and equity analyst with more than 18 years of experience in the investment industry. He has been ranked an All Star Analyst by Zacks Investment Research and his efforts in analyzing industries, companies and equity securities have been recognized by both Institutional Investor and Thomson Reutersâ?? StarMine Monitor. Heâ??s frequently published in The Washington Times and is a frequent contributor to the daily radio show â??Americaâ??s Morning Newsâ?ť and â??Americaâ??s Radio Newsâ?ť. He has been quoted in the Wall Street Journal, Investorâ??s Business Daily, The Street, USA Today and other publications. In addition, he can be frequently seen on televisionâ??s â??Fox Businessâ?ť show.

Advertisement
Advertisement

TRENDING NOW:

MILK-FAKE: UK Papers Push Farage Fake News 1 Day Before Election

FOREIGN AFFAIRS

Obama Judges Kill Americans’ Privacy to Help Democratic House Harass Trump

U.S. POLITICS

Human Events from London: Farage’s Eyes Power As Brexit Party Surges.

FOREIGN AFFAIRS

Extinction Rebellion’s Useful Idiots: Climate Alarmism Does Far More Harm Than Good

FOREIGN AFFAIRS

archive

Dividends Offer Insight as Well as Income

Many investors are fans of dividends because of the income stream they provide. Whether you choose to live off of those dividend payments or reinvest them to help grow your wealth and investing capital, monthly, quarterly or annual dividend payments are an added bonus for investors, but there are other reasons to be bullish when it comes to dividends. For example, the ability of a management team to consistently pay a quarterly dividend points to favorable cash flow generation. Even better is what I discussed with you last week — dividend dynamo companies that have such strong business models that they can consistently raise their annual dividend. A great example of that is McCormick & Co. (MKC), which just raised its annual dividend for the 28th time.

There is another positive to dividends and dividend dynamo companies in particular. Before I get to that, I think you’ll agree that one of the hardest things in investing is how to assess what a stock you are eyeing is really worth. There are all sorts of valuation techniques and methodologies you can employ to determine that security’s value. Believe me, after working with institutional investors for a number of years I’m quite familiar with them: the price to earnings (P/E) ratio, the P/E to growth ratio, price to sales and enterprise value to earnings before interest, tax, depreciation and amortization (EBITDA). If what you are analyzing has a net cash balance sheet, you have to account for that in your calculations.

Another valuation tool you can use is dividends. More specifically, you can examine the company’s dividend yield against the highs and lows in its stock price. For those companies that I recommend to subscribers of PowerTrend Profits and for positions I am evaluating for the Thematic Growth Portfolio that I oversee for Fabian Wealth Strategies, this is a mandatory exercise. By identifying prior peaks and troughs in a stock’s share price going back several years and the corresponding dividend yield, we can build an historical framework of peak and trough dividend yields for the shares.

Read more about using dividends to gauge the strength of a stock at Eagle Daily Investor.

Newsletter Signup.

Sign up to the Human Events newsletter

TRENDING NOW:

MILK-FAKE: UK Papers Push Farage Fake News 1 Day Before Election

FOREIGN AFFAIRS

Obama Judges Kill Americans’ Privacy to Help Democratic House Harass Trump

U.S. POLITICS

Human Events from London: Farage’s Eyes Power As Brexit Party Surges.

FOREIGN AFFAIRS

Extinction Rebellion’s Useful Idiots: Climate Alarmism Does Far More Harm Than Good

FOREIGN AFFAIRS

Connect
Newsletter Signup.

Sign up to the Human Events newsletter