Hard Truth about buying shares for yield

In Financial competency, Financial planning on 09/02/2015 at 3:32 pm

[A] safe dividend needs a business that is sustainable and profitable not just for a few years, but over the decades, or more than the entire life of some quite substantial companies, FT.

And do remember that Reits, Biz Trust, pay out most of profits, cashflow.

  1. That’s why reits, biz trusts, etc are most vulnerable to financial crisis, liquidity crunch. Shareholders need to be prepared to inject more cold hard cash to support your own stocks in such events / environment.

    My standard is for companies to have been increasing their dividends consistently over at least 30 years. This doesn’t mean merely got pay dividends for 30 years, but to increase dividends every year for 30 years without fail.

  2. It’s easy to engineer a yield, which can collapse down the road. If the yield sounds too good to be true it usually is.

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