How to Tell if a Stock's Dividend is Safe - Dividend Investing 101

[@LearntoInvest]

What do you think of these 5 tools for testing to see if a stocks dividend is safe? Are there any you would have added?

[@Dimitris_1987]

1. Levered free cash flow/(debt-cash)

[@christopher6886]

#5 is confusing the issue and shouldn't be included. Valuation has nothing to do with dividend safety.

[@johnwilson8482]

@@christopher6886 It's not that #5 has much to do with dividend safety, but that you don't want to overpay for a stock in the first place. So, a company might pass all the other tests, and have a nice safe dividend, but if it is selling well above its intrinsic value why would you want to buy it? I mean, I'll sell you all the hundred dollar bills you want for $110 each. Just tell me how many. ;)

[@christopher6886]

@@johnwilson8482 This was suppose to be about dividend safety - a qualitative metric - which has nothing to do with price - a quantitative metric. Two entirely different subjects. Jimmy goes from talking about dividend safety to purchasing a stock which may lead less experienced investors to think if the dividend is safe, they should buy it. Now, back to the hundred dollar bills... I'd be happy to take all you have at $80 each, perhaps you're having a black Friday sale?

[@johnwilson8482]

@@christopher6886 He literally quantified dividend safety by looking at ratios and rates. Hmm... is the dividends per share rate growing faster than the earnings per share rate? Then you probably shouldn't buy that stock (unless this is a one-time, explainable situation). And, #5 is a warning of when you shouldn't considering buying a stock, even if the dividend looks safe; it's not a suggestion to purchase any stock if the dividend seems safe. So you seem to be misunderstanding some things.

[@georgehadley7863]

Jimmy - As a dividend investor I think this is one of your best videos, thanks.

[@PassiveIncomeTom]

Great explanation Jimmy! 👍

[@gabrielfifield9620]

Hey Jimmy! Greetings from Germany! Keep on sharing your knowledge, you are doing humanity a favor! Thank you

[@mindsinmotion2825]

I like the fact the you are going step by step explaining your technique for determining the dividend's safety

[@vvolfflovv]

Looking at companies like BGS as of late, this info will really come in handy. Thanks again Jimmy.

[@conventionalischeating]

I have seen at least 100 of your videos, but I'm still impressed by how much value you provide. Great job, keep it up!

[@jagulba]

As always very informative and easy to follow, best educator for stock on youtube

[@traviswilliams1296]

Great topic and you covered it well. I prefer the bulk of my investments in safe stocks

[@11Alisher]

Really nicely explained and simple to understand! Thanks for this definitely going use this review few of my stocks

[@sofianehamouda1230]

Great work Jimmy !!. I would have added BS items like Cash and cash equivalents and see if they're falling. Too much debt can put dividends at risk if interest rates increased. And ultimately, management, although management is quite subjective to analyse

[@christianh.riiser2807]

Another great video from Learn to Invest - an easy guide to evaluate stocks dividend in term of safety - keep them coming Jimmy !

[@GregK235]

Thanks for working through the concepts with the ABBV examples. Very helpful! It's an education to see how earnings are affected by different accounting practices.

[@MrRdiazfam1989]

Exactly what I’ve been looking for thank you for going over the steps, how often do you go back and walk through the steps to check on your stock dividends in your portfolio?

[@LearntoInvest]

Personally I think it makes sense to go over it at least once a year probably more if there are big changes in the company

[@bradramm6239]

Thank you Jimmy for taking the time to educate us. Another great video!

[@LearntoInvest]

Thanks for the support 👍🙂

[@ssjj005]

Thanks for the nice video as always! What do you think about Macy's and Energy Transfer LP. M has weak business growth and ET has high payout ratio, but they both have high dividend yield which means high risk but good dividend. Please let me know how you think!

[@norabu789]

I also like to look at debt, while interest rates are low, this really isnt that big of a threat to dividends but when rates eventually go up or when earnings fall, the dividend could be cut. Of course debt is very specific to each company and business model so that must also be accounted for.

[@domusbird]

Hey Jimmy , could you have a look at Corestate capital holdings S A. ?

[@husseinsoliman8714]

(Hi I am Jemy 😁) very useful as usual

[@owenwalker1774]

Great video! Comment for the algorithm.

[@LearntoInvest]

Much appreciated 👍🙂

[@usfootman]

Why there is nothing about debt or obligations of the company? Aren't those more important then PE ratio?

[@LearntoInvest]

I think debt analysis is a great thing to do in general. With this particular process, debt is really accounted for with earnings per share since EPS is after interest expense. Thanks for the additional thoughts 😀

[@burakinkanada]

Seriously a great video! Could you do us/me a huge favor and show us where you get all these information. I mean like a step by step Explanation? That would so helpful. I do understand all the point you are showing here and all of them make sense of course. But to practice and analyse dividend stocks a would like to see HOW exactly you are doing it. I mean for example any well known aristoract stocks. Thank you!

[@GoodComedian2011]

👍

[@almazy6362]

Салам тёзка :-)

[@GoodComedian2011]

Салам:))

[@shadowninja6689]

While numbers are great, you also need to ask yourself if the company's current earnings are growth are sustainable or not. Newspapers looked like a safe investment before the Internet, then they folded like flies when their revenue couldn't be sustained. ABBV was on sale earlier this year because of all the long term risk involved with it (getting 60% of their revenue from 1 drug who's patent is expiring soon, and all the debt they're taking on to buy another company).

[@GengoSenmon]

Stock buybacks shouldnt be allowed. It makes it too easy for companies to mess with EPS

[@July4.1776]

Don't jimmy me!

[@lincoln9200]

Why wait so long to tell everyone the cost $400. That’s why I gave you a thumbs down