I believe there are many investors like me who love to invest in companies that pay dividends. Naturally, we hope that companies we invest in would have growing dividends. So, the question is "How can we differentiate companies that will have growing dividends from others?"In an attempt to find an answer to this question, I will perform a series of analyses in this and upcoming articles.
Today, I will focus on two metrics that are commonly thought to be useful in forecasting if a company is capable of distributing the same or higher dividends in future. They are Debt-to-equity Ratio and Operating Cashflow (referred to as DER and OC from hereon). In particular, I would like to see how DER and OC in year X influences the dividend per share (DPS) in year X+1.
Debt-to-equity Ratio's influence in numbers
Based on the data I have collected from the ......