4 Stocks With Embarrassingly Unsustainable Dividends
Owning dividend stocks can be a great way for investors to beat the market over the long term, and generate consistent cash flows as well. But all dividend stocks are not created equal, and yield, whether high or low, is not the only metric you need to keep an eye on.
Another key number is the payout ratio: how much the company pays out to shareholder divided by what it generates in earnings. When that ratio (expressed as a percentage) rises over 100%, it should be a warning sign for investors.
Four surprising companies with payout ratios over 100% are ExxonMobil Corp. (NYSE: XOM), Royal Dutch Shell plc (NYSE: RDS-A), Southern Company (NYSE: SO), and Six Flags Entertainment Corp. (NYSE: SIX). Here's why they probably won't be able to sustain their current dividend levels for long.
Source: Fool.com
