10 Things Every Dividend Investor Should Know

2. Investors Should Pay Attention to Company Fundamentals:

Companies with strong fundamentals are more likely to maintain and grow their dividends regularly. Before making an investment in dividend stocks, analysts advise investors to meticulously analyze the respective company’s balance sheet and its earnings trend. A large number of companies slashed or stopped paying dividends during the pandemic of 2020, exposing their financial instability. At the same time, many companies maintained and even increased their payouts during that period, which indicated strong fundamentals and robust financial footing. Steve Greiner, vice president of Schwab Equity Ratings, spoke about this aspect in one of the firm’s reports. He said:

“Fortunately, companies generally only cut dividends when they’re in distress, so favoring those with sound financial metrics can help mitigate this risk.”