Dividend Stocks Research

Dividend History Helps You Pull In Higher Income

Welcome to Dividend Stocks Research Your premier site for Rankings and

Reviews of the best dividends stocks around. For more info on dividend stocks

please visit our website DividendStocksResearch.com

Get Your Free Report On What You MUST Do to Never Run Out of MONEY in

Retirement!

We’ll tell you about thisSpecial Offer

at the end of the video!

Hi, My name is Aaron and I‘m with Dividend Stocks Research, today were

reviewing our recently published article…

Dividend History Helps You Pull In Higher Income

New Yorkers usually can’t resist taking a shot at California. All the superficial

showbiz glitz. The shortage of history. I get it. When San Francisco started to

boom, New York City was already a few hundred years old.

But...

When Juan Cabrillo sailed into San Diego harbor in 1548, New Amsterdam didn’t

exist.

And in Amsterdam proper, it would be another 54 years before the world’s first stock market opened and traders started buying and selling shares in the Dutch

East India Company.

History is wonderful stuff for investors. And it’s open to endless interpretation,

unless you’re looking at a stock’s dividend history. This is about as black

and white as it gets.

Dividend History 101

Want to put history to work so you can make smarter and safer investments in

the best dividend stocks? All you have to do is take a look at how

the dividend has been paid. Look at how it’s grown over the years.

Check to see if there have been long stretches without an increase. And look

for dividend cuts.Beyond hard numbers, you’ll get a good

feel for the company’s dividend philosophy

. For instance, you’ll find some mature companies that really don’t need to

invest a lot of money into their future growthand are more generous with

dividends than others.

Some companies like to keep a big warchest, some don’t. Some squirrel

away money for a possible future acquisition, or stock buybacks, and

some just plow the money into growing the dividend.

Tracking the dividend history will give you a good feel for this.

And as far as buybacks go...The potential for a stock buyback to

make your shares more valuable is just that. Potential.

And potential doesn’t pay your mortgage.

Dividends are real dollars. Cash on the barrelhead.

Stockbuybacks could fill their own history book, because talk is cheap.

It’s one thing for a company to announce a stock buyback, which is generally a good thing... it lowers the numbers of

shares out there, and has the potential to increase the value of the stock you own.

But it’s another thing to go into the market, spend real money, and buy your

company’s stock back.Stock market history is full of stories

about companies that announced stockbuybacks that never quite

happened.

And one of the ugliest stories comes from a city that has been a rich source of American history since the days of the 13

colonies... Philadelphia.

A Fall From Grace In Philly

Earlier this month, PHH Corp. $PHH said it was changing its mind. It was putting a

stock buyback on hold.On August 5th, the stock traded at

$24.09. Two days later, it went for $15.60.You see the same kind of punishment

when there’s a dividend cut.

In the spring of 2008, Washington Mutual and Wachovia, two beat-up banks, cut

their dividends.

Then they cut and ran, and went out of business. The ultimate dividend bust.

General Motors $GM cut its dividend in July of 2008. A year later it declared

bankruptcy, and the dividend didn’t come back until 2014.

Does a dividend cut mean you should sell and run for the exits?

Well, hard and fast rules for the best dividend paying stocks come with their own risks. But as far as alarms go, it’s tough to think of one that blares louder

than a dividend cut. That’s what dividend history teaches us time and time again.

Where Are All The Crystal Balls?

It gets downright comical how much attention is paid to CEOs talking about

what’s going to happen next.

Flawless crystal balls don’t sit on the desks of Tim Cook at Apple $AAPL, Jeff Bezos at Amazon $AMZN, and Howard

Schultz at Starbucks$SBUX.

There’s definitely not a crystal ball on the desk of Dawn Farrell. She’s the CEO at

TransAlta Corporation $TAC, a utility based in Calgary, Alberta Canada.

TransAlta is Canada’s #1 operator of coal-fired power plants, big into natural gas generation and hydro-electricity. It also generates a third of Canada’s wind

power.

History... TransAlta has plenty of it. The firm is more than a hundred years old.

But the dividend historyat TransAlta is more like a horror movie.

Here’s What A Scary Dividend History Looks Like

$TAC makes its quarterly dividend payment of 14 cents later this week.

You take a look at the dividend history, and you see that in early 2014, the

dividend was cut from 29 cents to 18 cents. And it’s still skidding.

Between 1994 and 2007, TransAlta paid a dividend of 24 cents, then 25 cents.

It was a model of consistency. In 2009, the dividend went up to 29 cents but it

didn’t stick.

So you look at this and based on history, and you can’t help but be a little bit

skeptical. You set the history book aside and crack open the financials for some

current events.

Take a look at the dividend payout ratio. This is the number that showshow much of the revenue coming in goes back out

to pay dividends.This number is expressed as a

percentage, and you usually want to see it down below 50%.

What’s TransAlta Corp’s dividend payout ratio?345%.

You got it... this means the company is living beyond its means. It can’t afford to

pay the dividend.

It’s one of those dirty little dividend payout ratio secrets exposed.

It’s spending almost three and a half times as much money to pay the

dividend this quarter as it has net income coming in.

How long do you think this keeps going?

Will Dividend History Repeat Itself?

Do you think we’re in for a re-run at TransAlta? Is history about to repeat

itself? In 2014, the dividend was slashed by 26%.

And you’ve got everything lined up right now for the same thing to happen again.

Now you might ask yourself...

“If TransAlta can’t afford to pay the dividend, why not just cut it significantly, take its lumps, and get on with things?”

I’m with you. You’d think this would be the best thing to do for the long haul.

Well, chances are the company figures things will get better, and revenues will

rebound sooner rather than later.

Maybe it believes the worst is over for its coal business, or that its investments in

Australia will pay off.

Sometimes, history tells us that when the board of directors keeps the dividend the

same, it’s a vote of confidence that is somehow rooted in fact.

But confidence lives in both the present and the future.

Look at the balance sheet, and you’ll see TransAlta is burning more than coal. It’s

burning cash.

Liquidity is down from a year ago.

So in a situation like this, you figure that TransAlta is dipping into its cash to keep the dividend the same so it can keep its

current shareholders happy.And that’s a tall order, since the stock

has been on a downhill run...

The Other Dividend History Lesson To Learn

Empirical evidence (the numbers) suggests that when dividends are cut,

the stock price suffers. Is this always the case? No. It’s not a

given, but it’s definitely a concern. And we’ve seen it at TransAlta.

It’s safe to say that nobody who sits around the table in a board of directors

meeting is chomping at the bit to cut the dividend.

Get yourself on the right side of dividend history.

Stay focused on the best dividend stocks.

A little bit of study can give you a lot of safety.

Want More from Dividend Stocks Research?

Follow us on Social Media

Want more FREE information on dividend stocks?

DividendStocksResearch.com

Get Your FREE Report Now

What You MUST Do to Never Run Out of MONEY in Retirement!

Click Here

READ THIS FREE REPORT!