Techniques To Avoid Dividend Cuts

Seeking AlphaDividend StrategyTechniques To Avoid Dividend CutsJul. 3, 2020 10:30 AM ET|| Includes: BNS, BPY, CM, ENB, HRUFF, ITPOF, LAZ, NHI, PWCDF, T, WFCby: The Dividend GuyThe Dividend Guy Dividend Growth RocksA service focused on stocks doubling their payouts within 10 years.SummaryWhen you see companies that are getting beaten down more than others, this is normally a sign that something is wrong.
Many companies that keep their dividend static will eventually cut it. If management can't increase its payout when the economy is growing, what will happen during a crisis? They will be among the first to cut their dividend.
The Dividend Triangle, composed of revenues, earnings, and dividends, is a very strong indicator when it comes to assessing the likelihood of a dividend cut.
In my last article, I've covered "What is a Dividend Trap". So that you can avoid a future wave of dividend cuts, I'd like to offer you my three favorite techniques to avoid them. They have been proven to be highly effective in the past. Beside a few exceptions (mostly due to the nature of the exceptional economic lockdown we suffered), we were able to avoid most of the dividend cuts at DSR.
The following is a short and applicable list of actions you should take with your portfolio this summer. There is nothing like hanging around a pool and optimizing your portfolio. Volume will be lower, volatility will take a pause, and it will be time for your to take a deep breath and make sure you don't suffer from additional cuts this fall.
#1 Trust the market - beware of high dividend yield stocks
My first indication that something is wrong is usually the market action itself. While I don't rely on it, there is still some truth speaking from the action in the market. When a sector or most of the market follow the same movement, it's difficult to understand exactly what the market is telling us. However, when you see companies that are getting beaten down more than others, this is... Read more