BALTIMORE (Stockpickr) -- Be warned: Your dividend payouts could be in peril this quarter.
Make no mistake, it's a great time to be a dividend investor. Corporate profits and dividend payouts are both making new all-time highs right now, and the dividend yield of the S&P 500 is higher now than it's been for the better part of two decades. But that doesn't mean those income checks are safe.
With so many firms plowing mountains of cash to their investors, so too are a number of companies that can't really afford to. When those names cut their payouts, shareholders should at least be aware. After all, there are few things that can slam stock prices with such certainty as a dividend cut.Normally, we focus on the other side of the dividends; typically, in this column, I point out companies that look primed to raise their dividends, not cut them. But figuring out which income names to avoid can often be just as beneficial for your portfolio as knowing which ones to buy. We've had a lot of success in pinpointing future gainers by focusing on a handful of metrics, so we'll flip them in reverse to spot potential dividend cuts. >>5 Toxic Stocks to Sell Now For our purposes, that "crystal ball" is composed of a few factors: namely a leveraged balance sheet and a payout ratio that's high - in some cases higher than the earnings that firms actually brought in for the last couple of years. While those items don't guarantee dividend cuts in the next month or three, they do dramatically increase the odds that management will need to cut payouts to avoid a more serious capital raise. Without further ado, here's a look at five stocks whose dividends are in peril in the next quarter.
Select the service that is right for you!COMPARE ALL SERVICES
Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV