{"id":110677,"date":"2009-12-29T06:30:31","date_gmt":"2009-12-29T11:30:31","guid":{"rendered":"http:\/\/dividendsvalue.com\/?p=5343"},"modified":"2009-12-29T06:30:31","modified_gmt":"2009-12-29T11:30:31","slug":"7-low-debt-high-rated-dividend-stocks","status":"publish","type":"post","link":"https:\/\/mereja.media\/index\/110677","title":{"rendered":"7 Low-Debt High-Rated Dividend Stocks"},"content":{"rendered":"

\"\"<\/a>When selecting a dividend growth stock<\/strong><\/a> there is really only one factor that is important – sustainability.\u00a0 As we evaluate many aspects of a company, what we are really trying to determine is if the company can continue to raise its dividend indefinitely into the future. To pay and raise its dividend a company must generate sufficient free cash flow. However, it is not enough to just generate the cash, it has to be available for dividend payments.<\/p>\n

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One of the largest uses for cash is to repay debt and its associated interest. Prior to the most recent downturn many companies took on enormous levels of debt, usually for one of these two reasons:<\/p>\n

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  1. Fund An Acquisition<\/strong>:\u00a0 Debt has been relatively cheap for some time and easy to access. When sellers thought the buyers stock was overpriced, they would demand significant levels of cash to close the deal. Debt was often used to raise the cash.<\/li>\n
  2. Restructuring<\/strong>: Analysts that follow companies have a target debt to total capital they are looking for. If they consider it is too low, management is encouraged to issue debt and use the proceeds to purchase their stock. (As an aside, I own a company that was encouraged to do this and eventually issued debt and purchased their stock close to its high. Then when the economy turned down they had to raise operating cash by, you guessed it, issuing stock well below where they purchased it.)<\/li>\n<\/ol>\n

    One of the key metrics I look for when evaluating a company is a debt to total capital ratio of 45% or less. Below are seven dividend companies with a debt to total capital less than 30%:<\/p>\n

    Nucor Corporation<\/strong> (NUE) is engaged in the manufacture and sale of steel and steel products. As the largest minimill steelmaker in the U.S., Nucor has one of the most diverse product lines of any steelmaker in the Americas. [Analysis<\/strong><\/a>]<\/p>\n