DDB

The Dividend Cushion ratio continues to build an impressive track record of warning investors of impending dividend cuts, but it’s not perfect. Let’s examine a few recent cases. By Kris Rosemann and Brian Nelson, CFA The Dividend Cushion ratio has proven to be an extremely useful tool for income investors to help safeguard their portfolios from dividend cuts, but it does have its limitations. Sometimes, external forces that cannot be captured in the calculation of the Dividend Cushion can impact the sustainability of the dividend payment. Some of these external factors can be as complex as a transformational acquisition, to as straightforward as an unexpected guidance reduction, to as simple as a capital allocation policy change. The board sets the … Read more