Part 4/9:
Metrics for Success
As a dividend investor, it's essential to understand key metrics that indicate a company's potential. The five primary metrics include:
Free Cash Flow: The cash remaining after all expenses and capital expenditures—crucial for sustaining dividends.
Dividend Yield: The percentage of a company’s annual dividend compared to its share price; a vital gauge of income potential.
Payout Ratio: This metric shows what portion of earnings is paid to shareholders; a lower ratio often signifies the potential for sustainable dividend increases.
Dividend Growth Rate: The annualized rate at which a company's dividend has increased; high growth rates are a good indicator of financial stability.