Course 407: High-Yield Stocks
What Is the Company's Dividend Track Record?
In this course
1 Introduction
2 What Is the Company's Dividend Track Record?
3 Is the Payout Ratio Rising?
4 Are the Company's Sales and Earnings in Line and Stable?
5 Does the Company Generate Consistent Free Cash Flow?
6 Is the Balance Sheet Healthy?
7 How Has the Stock Performed?
8 Is This Stock Expensive Relative to Others in Its Industry?
9 Conclusion: Looking Both Ways

Since dividend yield is the ratio of a stock's dividend to its price, it is possible for a stock to suddenly become a high-yield stock just because its price has dropped. And there is likely a good reason. The firm could be in a cash crunch, or its market could be shrinking. If so, it is a good bet that the dividend checks won't be as fat in the future. The trick is to find a stock that has a high yield because its dividend is high and steady--or rising--and not because its price has weakened. Philip Morris fits the bill. Its dividends per share rose at an average annual rate of 11% per year between 1996 and 1999, and the rise was steady, with gains in every year. Even when its earnings fell in 1998, Philip Morris still raised its dividend.

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