5 Safest Dividend Stocks for the Perfect Dividend Portfolio
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 Published On Mar 8, 2023

The stock market is crashing but these safe dividend stocks will never let you down! Five of the best dividend stocks to buy now and protect your money! 🤑 Get The Weekly Bow-Tie FREE https://mystockmarketbasics.com/daily...

This is the second in our Perfect Dividend Portfolio series, helping you build that perfect portfolio and live off your dividends. I’m covering every dividend type and strategy from high yield to dividend growth, monthly dividends and ETFs. In each video, I’ll show you five dividend stocks to consider then reveal my favorite, the stock that’s in my dividend portfolio.

✅ Don’t miss the first video in the Perfect Dividend Portfolio series…5 Highest Paying Stocks for YOUR Portfolio    • 5 Highest Paying Stocks for the Perfe...  

This week, I’ll show you five dividend stocks that between them have increased their dividends by more than 50 years and pay an average yield of nearly five-percent. Stick around and I’ll show you how to find the dividend stocks that will never let you down and reveal my favorite stock to buy.

Finding the safest dividend stocks starts as simply as just checking the company’s history of dividend payments. You’re not only looking for dividend cuts but also a history of dividend increases and growth in payment. You can download the data into a spreadsheet or just look at it this way.

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Next we’re checking for dividend sustainability, how safe is that dividend and we do that first by checking the Payout Ratio. Remember, this is the percentage of profits paid out to cover the dividend, how much is paid to investors and how much of profits are held back for growth. A payout ratio too high means the company may not stay competitive, sales and earnings growth could suffer and eventually the dividend could be in danger. Now as a general rule, under 50% isn’t too bad but you really need to compare this with the payout ratio of competitors in the same industry.

Last check is one of the easiest ways to verify a safe dividend before you invest. In Financing Cash Flows, you’ll find information on the company’s payment of debt as well as whether it’s issuing or repurchasing stock. The point here is that any company with an extra cash to pay down debt and repurchase shares is in no danger of cutting its dividend. Even if earnings and cash flow were to fall, the company could cut back on its share repurchase program or slow down debt repayment. On the other hand, a company that isn’t buying back shares or with enough cash to pay down debt…you better watch that payout ratio closer and might be more worried about whether the dividend is sustainable in a recession.

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Joseph Hogue, CFA spent nearly a decade as an investment analyst for institutional firms and banks. He now helps people understand their financial lives through debt payoff strategies, investing and ways to save more money. He has appeared on Bloomberg and on sites like CNBC and Morningstar. He holds the Chartered Financial Analyst (CFA) designation and is a veteran of the Marine Corps.

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