Roger Conrad writes two good income based newsletter: The Canadian Edge and Utility Forecaster.
In his recent interview he highlights some metrics that are used to evaluate Canadian Income trusts.
These are somewhat similar to our business trusts that invests in infrastructures, storage assets, buildings, railway, airplanes.
The metrics are:
Dividend Growth is the Ultimate Safety
Many investors including myself sometimes focus on a certain dividend cut off. Some placed it high at 8-10%.
Dividend growth rate is good because when a company is able to grow its dividends year on year, It shows a management focusing on improving dividend per share. It also improves the chances that your investment keeps up with inflation.
For payout ratios, watch the cash flow, not the conventional EPS
The usual wallstreet analyst will use a payout ratio out of earnings to evaluate dividend safety. Roger in this case advocates evaluating from a cash ...
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