Thats as per my dad.......In my opinion, some firms may increase dividend as well, some will retain their current DPS but some are either going to reduce or skip dividends as well. the number of companies slashing/skipping may outnumber those keeping it constant/increasing it, by a massive margin.
Some commodity stocks, some marginal dividend payers may be the culprits. Thats why, I am saying that yield mongers need to recalculate their DPS and also increase expected yield before chasing any yield stock.
My scheme is to reduce current year' dividend per share by 1/3, and go for a stock, if and only if, at the reduced DPS, the stock is offering you 8 p.c. individual investors can reduce the DPS estimate by more than 1/3, at their individual discretion, and can even consider a skip scenario.
For yield stocks, also avoid paying more than 4-5 times cash earnings, and try to get them at a 40 p.c discount to reported book value, after eliminating all revaluation reserves. also, add any contingent liabilities, to further enhance the Margin of Safety.
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