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Ideas for Income Investors. High Dividend Stocks, Mutual Funds etc.
6 Stocks with Room to Grow Their Dividend
Posted by: Dividends4Life (IP Logged)
Date: February 12, 2014 05:01PM
Dividend sustainability is paramount for the high-yield investor. Having a stock cut its dividend could potentially crush their income. A high-yield investor is less concerned about dividend growth than maintaining the current high-yield. Most traditional dividend growth stocks pay a moderate to low yield, thus sustainability is not enough. The investor in Dividend Growth Stocks also expects substantial and consistent growth.
This expectation does not change even when the economy turns down and earnings decline; dividend growth investors still require annual dividend growth. The companies that are able to accomplish this are those with a operating model that generates strong free cash flows with room to pay out a higher percentage as dividends. Below are several companies with a low free cash flow payout (below 40%):
Stocks Discussed: AFL, WFC, IBM, AROW, VZ, OHI,
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