Company is paying a dividend, Business Management

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When we refer to profitability, are we referring to more than the fact that the company is paying a dividend?

Ans) Yes, absolutely. I focus on the right hand columns of the Stock Guide ( Earnings per Share) to make particular that there are no recent negative numbers (a recent operating deficit). It's not uncommon for companies to pay a dividend for a while after they begin leaking oil. A dividend cut or omission won't be far behind. We need both, profits and dividends.


Always remember that a bad quarter, in a usually profitable long term picture, sets the stage for those good quarter to quarter comparisons that Wall Street gets all excited about down the road. Such earnings surprises always build the news, and often cause a severe decline in market price.

 


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