warning signs for potential dividend cuts

warning signs for potential dividend cuts and made notes.

- Soaring yield often due to share price collapse

If you're using a soaring yield as a sign, you're too late anyway. The main things I watch out for are shrinking operating margins and the total coverage of interest and dividend

- Management dropping clue in comments in quarterly statements, conference calls etc on their dividend policy, payout ratio and/or dividend growth outlook

- Company stops raising the dividend

- Declining revenues, earnings and cash flows

- Payout ratio shoots up and is then sustained at this higher level

- Change in interest coverage (earnings before interest and taxes (EBIT) divided by interest expense), as well as debt-to-equity versus peers.

- Making acquisitions when sales and cash flow are barely moving versus industry peers

Debt Ratios are key indicators

Higher interest rates. Choosing between cutting capex/limiting capex or maintaining the dividend. Disruption in the industry or change of direction for the company, ie. TCL going from a printer to a packager.