It's beginning to feel like there are two kinds of dividend stocks out there: those that have cut their dividends and those that are about to.
And who can blame them?
In a credit crisis, companies with large dividend yields are quickly reminded that they are giving away their most readily available form of capital. And when companies' shares are priced as if they won't survive the credit crisis, shareholders sometimes see dividend cuts as positive developments. After all, wouldn't you rather own shares in a viable company that pays no dividend than in a bankrupt company that declares high dividends all the way down into oblivion?
As a result, we're on pace for the worst dividend cuts since the 1930s, and earlier this year the stock prices of companies including Wells Fargo , CBS , and General Electric actually rose immediately after the news of dividend cuts.
That's all well and good, but what if, like me, you're old-fashioned and want to find some companies that can actually sustain their dividends?
Here's how to find them
We need to identify companies that:
Here are a few that meet those criteria:
Company
Recent Dividend Yield
Payout Ratio
Interest Coverage
China Mobile
(NYSE: CHL)
3.6%
40%
94x
Philip Morris International
(NYSE: PM)
5.0%
47%
17x
Edison International
(NYSE: EIX)
3.9%
34%
3x
Nucor
(NYSE: NUE)
3.2%
48%
16x
Bristol-Myers Squibb
(NYSE: BMY)
6.1% Continued... |