Focus on the Dividend Stream
Selecting the right dividend payers can supply consistent, growing payments each and every year. The TYD Dividend Safety Score gives you an easy way to evaluate your holdings.
We want to separate the financially stable, dividend-focused companies from those with the highest risk.
How large is it?
How safe is it?
How fast is it growing?
5 Critical Dividend Safety Components
Definition: The percentage of a corporation’s net income that is paid out in dividends.
Why? Dividends come from earnings. The percentage of those earnings the company pays is an indicator of their commitment to dividends. Of course, too large of a payout makes continued growth risky and cuts likely if earnings decline.
Consecutive Payment Growth
Definition: The total consecutive years a company has increased its dividend payment
Why? Nothing points to dividend safety like a recent increase. A pattern of consecutive increases highlights a company’s commitment making annual, growing payments.
Dividend Growth Rate
Definition: The percentage increase of the dividend payment over the previous 5 years
Why? A growing payment helps keep up with inflation and demonstrates a devotion to dividends.
Definition: Earnings per share growth measured over the previous 5 years
Why? Growing sales, and more importantly, profit, will allow a company to continue to pay their regular dividend and potentially increase it.
Definition: Annual dividend payment divided by the current market price
Why? Simply paying a dividend puts a company ahead of its competition with no payments. Without dividends, stocks are little more than a piece of paper.