How To Identify Stocks With Stable Earnings And Dividends?

  • Feb 10, 2019 AEDT
  • Team Kalkine
How To Identify Stocks With Stable Earnings And Dividends?

As the market players are aware, the investments in the equities are quite risky. As a result, some of the risk-averse investors prefer to allocate their investable capital towards safer assets like debt instruments. However, the investors cannot deny the fact that even though the equities are riskier, they do provide strong returns. The investors need to be patient when it comes to investments in the equities. Therefore, it can be said that the investments in the equities are a long-term thing. It can be assumed that for investments into the stocks, one need to primarily consider two factors like stable earnings as well as dividends. Before making investments into the equities, the investors carefully understand the company’s business model as well as they should have a broad understanding of the industry in which it carries out operations. Therefore, in order to make investments in the stocks which are having stable earnings, one needs to have a look at the company’s past performance. The investors can also consider the components which are there in the total revenues. Always it is useful to know the logic behind selecting companies which provide stable earnings with dividend such as generating consistently high profit after tax (PAT), holding huge reserve, debt-free status, maximum promoter holding, decent track record of paying dividend to its shareholders, etc.

The investors can see whether or not there is some sort of regulatory pressures on the company moving forward which might impact its earnings in the future. They should make deployments in the companies which they think would benefit from the government initiatives. Moreover, they should also consider a trend which is present in the company’s operating expenses and what are the plans of the company moving forward related to the operating expenses. That is to say that whether they are planning to adopt certain cost improvement initiatives moving forward or not. The company might say that it would increase its expenses moving forward but sometimes it supports the company in generating strong earnings and increasing the market share. The investors should also consider the market share of the company and whether or not there are expectations of the rise in the market share.

Also, most of the investors make deployments in the equities so that they can generate strong dividends. Therefore, the investors should always have a look at the company’s dividend pay-out ratio and what are the company’s plans for the future when it comes to giving dividends. However, the market players can also have a look at the past trend with regards to the dividends. Moreover, investors should also have a brief look at the company’s balance sheet. A company which is having a strong balance sheet might be in a better position to give dividends in the future. Also, the market players should have a look at the company’s viewpoints and understand what the company is targeting in the future. A company which is having a strong capital position is expected to be in a better position when it comes to paying the dividends. Therefore, a company which is having a strong balance sheet, consistent dividend pay-out ratio, as well as favourable outlook with respect to the capital management, can be considered for the investors which are looking to generate dividends.


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