![]() ![]() ![]() ![]() Dividend growthįor long-term dividend investing, it is not only the current dividend policy of a company that is important, but also the question of whether there is a prospect of dividend growth in the coming years, growing in line with rising corporate profits. Companies then fund the payout with external financing, burdening their balance sheets and lines of credit. What's worse, a company may insist on maintaining its dividend even when cash flows are insufficient to cover the payment. ![]() This slows down a company's future growth, as there is less dry powder for investment when growth opportunities appear. In order to still create value for shareholders, they pay out the excess cash. Companies may do this because they have insufficient opportunities to invest their earnings. Even when there's nothing wrong with the company or its sector, a high payout ratio isn't necessarily good news for investors. For this, we look at the pay-out ratio, the part of the earnings per share that is paid out to shareholders. There is another argument against a very high dividend. ![]()
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