Dangerous Dividend Stocks to Avoid for Retirement

How do you tell if a company’s dividend is unsustainable? Some look at the current yield in comparison to its peers. If we are talking about the packaged goods industry, for example, and Company A has a yield of 15% while Company B’s is 3%, most likely there’s something’s wrong with Company A’s business, thereby reducing the value of its stock.

Income expert Roger Conrad uses free cash flow rather than earnings when examining a stock’s payout ratio. All things being equal, free cash flow is a much better indicator of a company’s overall health. Using the FCF ratio as my guide, here are four stocks that possess an unsustainable dividend: Windstream Holdings’ (WIN), Vector Group (VGR), PDL BioPharma (PDLI) and Oi SA (OIBR).

Source: InvestorPlace

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