Free Cash Flow

Free Cash Flow

Free cash flow (FCF) is the cash available after operating expenses and capital expenditures. Companies with 관련주 positive FCF are better positioned to maintain and grow their dividends.

  1. Example: A company generating $100 million in FCF and paying $30 million in dividends has ample room to sustain and potentially increase its dividends.

Market Conditions and Economic Factors

Market and economic conditions can significantly impact dividend stocks, influencing their performance and dividend sustainability.

Interest Rate Environment

Interest rates affect the attractiveness of dividend stocks. Rising interest rates can make fixed-income investments more appealing, potentially leading to lower demand for dividend stocks.

  1. Example: In a rising interest rate environment, utility stocks might see decreased demand as investors shift to higher-yielding bonds.

Economic Cycles

Economic cycles influence corporate earnings and dividend payments. Defensive sectors like utilities and consumer staples tend to perform better during economic downturns, providing stable dividends.

  1. Example: During a recession, an investor might increase exposure to defensive dividend stocks to ensure steady income.