Jim Trippon, CPA

For those of you who depend upon dividends to fund or supplement your cash flow, these are scary times (though not so scary as depending on the movements of the stock markets). According to a report by Standard and Poor's published April seventh, a record number of companies cut their dividend during the first quarter of this year. The total amount of money lost to American stockholders declined by $77 billion. But, at the same time a record low number of companies announced plans to increase their dividends.

Should you be worried? You bet! This is exactly why The Dividend Genius does research 365 days a year so you won't be caught in the death spiral that happens when a company cuts its dividends and investors in that company cut and run leaving you holding a stock with a severely depressed price.

The question is how are we doing at keeping you safe? Our record for the last twelve months shows that not only have we kept you out of stocks that have cut their dividend, in most cases, they have raised it in spite of the economic crisis. So far in 2009, out of our eleven positions in our model portfolio five companies have raised their quarterly distributions by four cents, three by three cents, two by two cents, and two have maintained them at the same level. Not one has cut its dividend!

Let us put this in perspective to show you how difficult stock picking for high yielders in this environment can be. This is the first time since S&P started tracking dividends in l955 that dividend decreases outpaced dividend increases. But we aren't out of the woods yet. Although the senior index analyst for Standard and Poor's has stated that the bulk of the cuts might now be completed, there may be a second round of cuts as companies review their 2010 budgets and expenses beginning in August and September.

Finding the best of the best dividend payers is harder now than it has been in decades. We always look beyond the basics of dividend yield and payout ratios and scrutinize every figure on a company's balance sheet with special attention to its debt structure. After all, in a credit crunch even profitable blue chips like GE may cut their dividends to preserve capital if they face more maturing debt than they can pay off or roll over.

However, because of last year's huge market sell off, some stocks have higher yields than bonds for the first time in half a century. For our subscribers to The Dividend Genius this means you have the information to invest in the right mix of strong well-capitalized dividend payers that can give you more income than bonds. What's more, our high dividend payers have the long run potential for growth that only equities can provide.

This is truly a unique opportunity, and we don't know how long the window will remain open. Take full advantage now of the solid dividend paying stocks we recommend. We have a rare opportunity to harvest high yields while stock markets are still relatively low and to reap a second gain when a full market recovery finally happens.

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