Three signs of a safe dividend

The interplay of several elements like economic moats, strong finances and balanced payout ratios creates a reliable stream of dividends, says Morningstar's Josh Peters.

Susan Dziubinski 17 May, 2016 | 5:00PM

Dependable. Stable. Reliable. These words often come to mind when investors think of dividend-paying stocks--unless these investors own  Potash Corp. (POT) or one of the many energy firms that cut their dividends over the past year.

How can you make sure the stock you own today will continue to pay its dividend tomorrow? Josh Peters, editor of Morningstar DividendInvestor and author of The Ultimate Dividend Playbook: Income, Insight, and Independence for Today's Investor, argues that a trio of factors collaborates to generate a steady stream of dividends.

Here are the signs to look for when evaluating a company's ability to maintain its dividend.

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Securities Mentioned in Article

Security NamePriceChange (%)Morningstar Rating
Altria Group Inc39.66 USD1.23
General Electric Co7.05 USD4.29
Nutrien Ltd49.28 CAD3.64

About Author

Susan Dziubinski

Susan Dziubinski  Susan Dziubinski is director of content for Morningstar.com.

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