Mon Nov 21, 2022 9:19 am
If you're focused on income, the dividend yield is another important metric to consider. If the dividend yield is above average for a stock, that could indicate it's trading at a good price. However, be sure you don't fall into a yield trap. Sometimes, dividends are unsustainable, so be sure to check how safe the dividend is based on a company's payout ratio as a percentage of earnings and free cash flow. And be sure to look forward and check that the earnings and cash flow are sustainable and growing. You may even develop your own dividend discount model by projecting dividend growth over the next several years.
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