What Do You Warn Of When Choosing Stocks? What do you warn of when choosing stocks?
Investors who focus on dividends should pay attention to companies that do not have a long history of paying dividends. The Infinity Code investor must feel that the dividend payment will always be an integral part of the company’s culture.
It is also necessary to know how The Infinity Code Review company’s dividend policy has been affected by changes in its performance and general economic climate over the years. There is a strong possibility that companies that pay the same dividends or those that have distributed their shares continuously over a number of years, the future .
But imagine the consequences that could happen if The Infinity Code company devalued its shares or stopped distributing one of its shares after it had been doing so for several years. There is no doubt that the stock will fall sharply. In general, companies are keen to do what they can to keep their share level up or down as they realize what kind of impressions they will be given by reducing stock distributions to the market. Discontinuing the distribution of shares that have remained high for a long time generally means that there are enormous challenges experienced by the company, or that the company is experiencing financial difficulties.
After ascertaining that the company has consistently distributed dividends in the form of a reasonable amount of revenue, the main question to be answered by the researcher is: Does the company have sufficient cash resources to continue to pay dividends in the future? Do you have a strong financial position to do so? There is no doubt that there are financial instruments that can be used to help estimate this. Investors should note, however unlikely it may be, that companies that in the past have paid dividends and have a strong financial position to continue to do so in the future may decide not to continue to pay dividends for special reasons. The company alone in the end.
The secret to success in paying dividends is the availability of a strong cash flow. Profits are good, but cash drives dividends, so investors should try to sort out stocks of companies that have a steady or growing cash flow per share. A company that is able to develop its cash flow is in a better position to pay dividends from a company that does not generate cash regularly.
One of the criteria that helps determine whether earnings per share is safe or not is the distribution coverage ratio, which is calculated by dividing the cash flow per share over the last 12 months on the last or expected earnings per share over the next 12 months. If the rate of return exceeds 1.0 then the investor should feel confident that the earnings per share is safe. If the value of the return ratio falls below 1.0, it clearly means that there is a risk of a decline in the value of the share in the future. A company with a coverage ratio of less than 1.0 needs to borrow or sell its assets to pay dividends. Many companies in such a situation reduce the amount of shares distributions or refrain from paying. If the sorting engine can not access the cash flow figures, then a margin of safety can be achieved for the earnings per share when it is two thirds of the value of the profits. Some independent financial institutions such as S & P, Moody, Valuable Line, Classifications of Infinity Code Review earnings per share security scores.
In addition to looking for a company that has sufficient resources to pay its dividends, the investor must look for companies that can increase their dividends. Any company with a distribution ratio below the average market ratio of approximately 0.41 is likely to increase its dividend and thereby increase shareholder returns. If the company maintains the stability of this ratio as it achieves an increase in its profits, the dollar value of the dividends received by the investors will increase over time.
Simply put, companies with strong profits have the opportunity to make higher allocations than low-profit companies. Companies that pay dividends and have strong profits are also likely to be able to increase their capital over time. When coupled with income from equity distributions, it yields an impressive total return.