Nation, this pandemic has hit every sector of the economy. More than 770 dividend cuts means companies in every industry have pulled back.
That’s where I want to look, at those companies that are just being cautious with the cash flow, with strong financials and businesses that can support that higher dividend yield.
A great example of this is Capital One Financial, ticker COF, and really a lot of the banks could fall into this category. Capital One cut its dividend in August to $0.10 from the $0.40 per share it had been paying every quarter since 2015.
I see the dividend back up to at least thirty- or forty-cents a quarter early next year which would be a dividend yield over 2% for investors at this price.
First is I’m going to the Statement of Cash Flows. This is the actual cash in and out of the company and really the most important of the three financial statements to watch.
I’m also looking for what’s called Free Cash Flow, and this is just that Cash Flow from Operations, the CFO then minus cash spent for capital expenditures or money the company spends to keep things running.
I want to look at the operational expenses, that’s the cost of running the business each quarter or year.
It’s on the Income Statement and I’m going to be comparing this with cash reserves to make sure the company has that cash survivability.