MODERN VALUE INVESTING: 25 Tools to Invest With a Margin of Safety in Today's Financial Environment by Sven Carlin

Author:Sven Carlin [Carlin, Sven]
Language: eng
Format: epub
Published: 2018-04-23T04:00:00+00:00

Figure 29 - GE’s stocks after the dividend cut announcement from February 28 to March 09 2009

Source: Author’s data

What all this means is that if you’re looking for a margin of safety in the dividend a company is paying, the most important safety factor is the sustainability of the dividend. To check whether the dividend is sustainable one must check the available cash and also the operational cash flows, especially how those cash flows change during bad economic times.

Similarly, on November 13 2017, GE slashed its dividend from 24 cents to 12 cents per quarter. Even if this is supposed to make the company more stable, the stock price dropped 8% on the announcement day.

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