Sustainable Profits: 6 Dividend Champions with Encouraging DuPont Breakdowns

If you are considering a stock as a source of dividend income, it is important to remember that dividends are not a guarantee of continued future payments – thus an analysis of dividend sustainability is important. There are several ways to assess this. One way is to look at the historical dividend trends of the company. Another way is to analyze the profitability of the company, which funds their dividend payments to shareholders.With these considerations in mind, we performed a DuPont analysis of the sources of profitability for dividend champions, i.e. companies with a history of increasing dividends for at least the past 25 years. From this analysis, we found 6 companies that passed all requirements for positive results.click to expanded imageWe broke the ROE equation into three parts:ROE = (Net Profit/Equity) = (Net profit/Sales)*(Sales/Assets)*(Assets/Equity) = (Net Profit margin)*(Asset turnover)*(Leverage ratio) All of the stocks mentioned... Read more