8 Highly Liquid Dividend Stocks With Strong Sources Of Profitability

Many investors rely on dividends as a source of income, so if you're considering dividend stocks for this purpose, it's important to check that a stock's dividends are sustainable. If a company is currently paying higher dividends than they should, investors might see their dividend get cut. Profits are the primary source for a company's dividends, so a profitability analysis should be top on the list. To illustrate this, we ran a screen on stocks paying dividend yields between 1-7% (yields beyond 7% may be unsustainably high) and payout ratios below 50%. The payout ratio is dividend per share/earnings per share, and the lower the ratio the more sustainable the dividend. To check for strong profitability, we screened these dividend stocks using DuPont analysis. DuPont analyzes return on equity (net income/equity) profitability by breaking ROE up into three components: ROE = (Net Profit/Equity) = (Net profit/Sales)*(Sales/Assets)*(Assets/Equity) = (Net Profit margin)*(Asset... Read more