Course 408: Cyclical Stocks
How Steady Are the Company's Dividends over a Cycle?
In this course
1 Introduction
2 How Is the Company Doing Now?
3 How Wildly Do Sales and Profits Fluctuate?
4 How Leveraged Is the Balance Sheet?
5 Does the Company Consistently Generate Positive Cash Flow?
6 How Steady Are the Company's Dividends over a Cycle?
7 Is the Firm Diversified Geographically and by Product Line?
8 Is the Long-Term Trend in Sales and Profits Upward?
9 How Has the Stock Performed?
10 How Expensive Is It?
11 How Expensive Is the Company Based on Normalized Earnings?
12 How Does the Price/Sales Ratio Compare with Historical Levels?
13 Conclusion: Get 'Em while They're Cold

Another gauge of the financial strength of a cyclical is how consistently it pays dividends. United Technologies has increased its dividend every year since 1994, but between 1990 and 1993, there were no increases. This is common for a cyclical; many reduce their dividends or cut them altogether when times get tough. Although you can't always rely on United Technologies to raise its dividends, you can be pretty sure the company will pay something, even in bad times such as in 1991 and 1992.

Next: Is the Firm Diversified Geographically and by Product Line? >>


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