GE Debacle Reveals Weaknesses in Dividend Strategy

Another potential red flag with dividend stocks is weak cash flow, experts say.

“If a company has declining cash flow and/or their payout ratio is higher than 50 percent, I’d consider those major red flags and not recommend purchasing that dividend stock because it increases the likelihood of the dividend being cut,” said Robert P. Finley, principal at Illinois-based Virtue Asset Management.

Finley “always” looks at the cash flow of the company.

“I want to know what percentage of cash flash is being used cover the dividend payout,” he said. “This is referred to as the payout ratio and the rule of thumb is that a company should be using less than 50 percent of cash flow to pay dividends.”

How to Budget for December Holidays in October

Your past holiday spending is the best indicator of what you’ll spend this season, says Robert P. Finley, a certified financial planner and the principal of Virtue Asset Management in Illinois.

“Try to get your credit card statements,” Finley says. “Try to look at your bank statements. What did I spend on presents? Did I have to do traveling? Did I have to fly somewhere?”

NerdWallet: If at First You Miss a Financial Goal, Try, Try Again

missing-financial-goal“Once you’ve reached that goal, or more importantly not reached that goal, I really think it’s important to look back at the spending habits and trends over the time and compare it to the budget you set up,” says Robert P. Finley, a chartered financial analyst, certified financial planner and the principal of Virtue Asset Management in Illinois.

MarketWatch: Americans will talk about sex and infidelity before they talk about this…

This willingness to keep one’s personal finances under wraps stems from people’s embarrassment and/or social awkwardness around discussing money rather than something more nefarious, said Robert Finley, a certified financial planner and principal at Illinois-based advisory firm Virtue Asset Management.