Understanding the Dividend Reliability Indicator
The Dividend Reliability indicator evaluates how consistently a company pays dividends over time. It looks at streak length, payment frequency, and any history of cuts or omissions.
What It Measures
- Dividend Streak: Consecutive years of dividend payments
- Payments per Year: Typical frequency (quarterly, monthly, etc.)
- Cuts in Last 10 Years: Any dividend reductions
- Omission Risk: Fewer payments than expected for the frequency
How to Read the Status
| Status | Criteria | Meaning |
|---|---|---|
| 🟢 Good | ≥ 10 years, no cuts | Proven track record of consistent payments |
| 🟡 Neutral | ≥ 5 years, ≤ 1 cut | Generally reliable with minor concerns |
| 🔴 Bad | Multiple cuts or omissions | History shows payment issues |
Why It Matters
Past behavior is a strong predictor of future payments. Companies with long, unbroken streaks have demonstrated commitment through recessions and market downturns. Those with cuts may do so again under pressure.
What to Do
- Good: Strong confidence in continued payments. Often qualifies as Dividend Aristocrat or King.
- Neutral: Acceptable but monitor for changes in company fundamentals.
- Bad: Approach with caution. Understand why cuts happened before investing for income.