How To Find Stocks That Will Boost Dividends

When the economic climate gets rough, many companies are forced to reduce or even outright eliminate their dividends. They have no choice:Cash flow falls, and any efforts to sustain adividend at current levels bleedscash from thebalance sheet. But there's a straightforward way to assess not just the safety of a dividend, but its growth prospects as well.

Yet among these steady growers, it's also possible to find a more limited group that also pays a dividend. Once you're focused on this group, there's a simple way to calculate how much a dividend might grow. In a nutshell, the lower thepayout ratio (the amount offunds spent on dividends, divided bynet income ), the higher the potential dividend growth rate.

Source: NASDAQ

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