One of the nice things about dividends is they pay you to wait for an investment story to play out. That might be a company on the verge of recovery or perhaps the cash payout is a sweet aperitif in anticipation of gorging on a growth breakout.
Alternatively, on the downside, high dividend yields can be like a pitcher plant for investors – an inducement to sink capital into a sinking venture. Every company is different, so there is no uniform way of reading results from our Alpha dividend yield screens; however, we can use the general rules to inform next questions.
Our large-cap screen is still topped by the big tobacco companies, Imperial Brands (IMB) and British American Tobacco (BATS), and both are struggling to grow sales and earnings. In a time when high taxes are pushing cigarette smokers towards counterfeit and bootlegged snouts, the cash-cow status of these companies for dividend portfolios could be questioned.