2 Safe Stocks With Fortress Balance Sheets
One of the best ways to avoid financial risk in your life is to avoid debt. That's not always possible, given the cost of homes, cars, and education, but the less leverage you have, the more financial flexibility you will have. That same statement is true for companies. This is why ExxonMobil (NYSE: XOM) and Chevron (NYSE: CVX) have been able to navigate the energy patch while still rewarding investors with decades of annual dividend increases.
Assume a company uses leverage to fund an acquisition. That debt shows up on its balance sheet, and the increased interest expense appears on the income statement. What happens if the purchase doesn't pan out as planned or the core business starts to falter? The answer is that the debt and interest expenses associated with the deal stick around while the top and bottom lines suffer.
Image source: Getty Images.
Source Fool.com
