In 2025, Safety Net was once again an excellent resource for evaluating the safety of a company’s dividend.

During the year, 10 stocks were rated “A” for dividend safety. None of them cut their dividends. In fact, since 2023, not one of the 29 “A”-rated stocks has lowered its payout within a year after we evaluated it.

Even more impressive, 50% of 2025’s “A”-rated stocks boosted their dividends during the year, including Iron Mountain (NYSE: IRM), which raised its dividend by 10% six months after my “A” rating was released, Delek Logistics Partners (NYSE: DKL), which raised its distribution each quarter, and MPLX (NYSE: MPLX), which hiked its payout by 12% less than a week after I gave it an “A” rating.

I only gave four stocks a “B” for dividend safety in 2025, but two of them boosted their dividends, while the other two kept them the same. There were no cuts.

Energy Transfer (NYSE: ET) was rated “B” in April and raised its distribution every quarter in 2025.

There were seven stocks whose dividends were considered to have a moderate risk of being cut, receiving a “C” rating. Two raised their dividends; two cut them. The average change to the dividend of those seven stocks was -10.6%.

There were a handful of cuts among the “D” and “F”-rated stocks as well. We gave 12 stocks a “D” grade, and 17 others were rated “F.” Two out of the 12 “D”s lowered their dividends, while three out of the 17 “F”s did so.

“D”-rated stocks had the biggest average drop at 12.4%. “F”-rated stocks only saw a 6.4% average decline, but that number is skewed a bit by one variable dividend that saw a sizable – yet likely temporary – increase.

Back in February, Stellantis (NYSE: STLA) slashed its dividend by more than 50% a week after I issued a “D” rating on the stock.

Advanced Flower Capital’s (Nasdaq: AFCG) dividend wilted in 2025. After I gave it a “D” rating, management proved me right by cutting the dividend twice and then skipping it altogether in the fourth quarter.

In June, Research Analyst John Oravec said there was a strong likelihood that OFS Capital (Nasdaq: OFS) would “have a repeat of 2020 with a cut coming down the line” before slapping the stock with an “F” rating. The dividend was cut in half in December.

All in all, it was another terrific year for Safety Net.

Thanks to all of you who submitted requests for stocks to be evaluated in the Safety Net column. Keep them coming! Leave the ticker symbols in the comments section below.

You can also check to see if I’ve rated your favorite dividend payer recently. Just type the company name in the search box in the upper-right corner of this page, and hit “enter.”

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The market jumped as a result.

Investors should tread carefully – not because valuations are at historically high levels (though that is true), but because inflation is likely to burn hot if the Fed lowers rates.

Powell himself said the Fed has to manage both employment, which continues to stagnate, and inflation, which continues to rise. A rate cut only adds gasoline to the inflation fire.

In January, in the Forecast Issue of my newsletter, The Oxford Income Letter, I predicted that inflation would spike in 2025. A Fed rate cut would likely make that forecast a slam dunk.

There are not many investments that keep up with inflation – particularly ones that generate income.

Fixed income doesn’t do the trick. If you’re earning $1,000 a year in fixed income and prices rise 5%, something that used to cost $1,000 last year now costs $1,050. But your $1,000 in fixed income interest doesn’t budge, so you have a $50 hole to make up.

One of the only ways to combat inflation is with dividend growth stocks.

These companies pay dividends (usually quarterly) and raise their dividends each year. If you have a stock whose dividend is hiked by a meaningful amount, you could actually increase your buying power, even in periods of rising inflation.

For example, Civista Bancshares (Nasdaq: CIVB), a microcap bank based in Ohio, has been around since 1884. Today, the stock yields 3.2%, but the company has raised its dividend every year since 2012 at a compound annual growth rate of over 13%. The most recent dividend increase was lower at 6.3%, but that is still above the current inflation rate, so it still boosted shareholders’ buying power.

Chevron (NYSE: CVX) is another solid dividend growth stock. The oil and gas giant has a current yield of 4.3% and has raised its dividend every year for 36 years.

The most recent increase was 5%, which as of now is higher than inflation.

Over the past 50 years, companies that raised or initiated a dividend outperformed the equal-weighted S&P 500 by nearly 3.5 times. They beat non-dividend payers by more than 1,700%.

Furthermore, when the spit hits the fan, dividend growers are safer than the overall market. The S&P 500 Dividend Aristocrats Index, which tracks companies in the S&P 500 that have raised their dividends every year for at least 25 years, is 10% less volatile than the broad market.

In other words, during a correction, the Aristocrats should decline less than other stocks.

Rates are coming down, and inflation is going higher. Investors should look toward dividend growth stocks to keep up with inflation – or else risk seeing their purchasing power be reduced.

The post Rate Cuts Are Coming… and So Is Inflation appeared first on Wealthy Retirement.

They say that the funds should be used to grow the business – either by investing in the business itself or by acquiring new ones.

As former President Joe Biden says, “That’s a bunch of malarkey!”

Let’s look at why that argument doesn’t hold water.

Obviously, I’m not opposed to a management team investing in its business for growth or even buying other companies, so long as it will add to long-term profitability and cash flow.

But often, executives spend shareholders’ capital on ill-fated acquisitions simply because the money is there.

In my book Get Rich with Dividends, I mentioned a discussion I had with Scott Kingsley, the then-chief financial officer of Community Bank System (NYSE: CBU). He explained to me why the company has a policy of consistently returning capital back to shareholders in the form of dividends.

He said, “We are very ‘capital efficiency’ conscious. We believe ‘hoarding’ capital to potentially reinvest via an acquisition or some other use can lead to less-than-desirable habits.”

He went on to say that because of the company’s dividend policy, when management wants to make an acquisition, it usually must go to the capital markets for financing, which forces it to closely examine whether the transaction really makes sense.

Let’s Make a (Bad) Deal

How many horrible acquisitions can you name?

Chances are management made them because it had the cash on hand, so what the heck? Got to spend it on something, right?

In 1994, Quaker Oats (now part of Pepsi) bought Snapple for $1.7 billion. Just three years later, the company sold Snapple for $300 million, losing 82% of its investment. That means $25 per share of Quaker Oats shareholders’ money went out the door and into the pockets of Snapple’s owners. Would Quaker Oats’ shareholders have preferred a dividend instead? I’m not a mind reader, but I’m going to guess yes.

Similarly, in 2007, Clorox (NYSE: CLX), which does have a solid track record of returning cash to shareholders, paid $925 million to acquire Burt’s Bees. Four years later, it took an impairment charge on the acquisition of $250 million, or $2 per share.

Would Clorox’s shareholders have appreciated a $2 per share dividend? I’m sure they would have.

Now, that doesn’t mean Clorox would have issued a $2 dividend had it paid the right price for Burt’s Bees, but you can see that companies can be easily tempted to spend shareholders’ money, no matter the price, in order to land a prized acquisition.

Dividends = Stronger Earnings

Studies have shown that companies that pay dividends have more reliable earnings than those that don’t.

Douglas J. Skinner and Eugene F. Soltes, professors at the University of Chicago and Harvard University, respectively, concluded…

We find that the reported earnings of dividend-paying firms are more persistent than those of other firms and that this relationship is remarkably stable over time. We also find that dividend payers are less likely to report losses and those losses that they do report tend to be transitory losses driven by special items.

So non-dividend-paying companies may use their cash to acquire growth, but dividend-paying companies have stronger and more consistent earnings. And a vital rule of investing is that stock prices follow earnings.

If earnings are better and more reliable for dividend-paying companies, that should mean dividend-paying companies’ stocks perform better.

And we know that they do. Companies that grew or initiated dividends outperformed the general market by 170.6% over a 45-year time frame, while the companies that did not pay dividends barely budged over the same time period.

Dividend stocks beat the pants off those that don’t pay dividends, and shareholders receive income while their stocks are in the process of issuing said beating.

So the next time a friend says a company should have better things to do with its cash than pay dividends, wish them luck with their investing – and just know that you’ll likely be picking up the tab for lunch in a few years, because you’ll be the one who can afford it.

The post Dividend Stocks Beat the Pants Off the Market appeared first on Wealthy Retirement.

Business Overview and Highlights

Emerson Electric is a $49 billion business. The company is based out of Saint Louis, Missouri and employs 76,500 people. Last year, Emerson Electric pulled in $15 billion in sales, which works out to $200,000 per employee.

The company operates within the industrial sector and maintains a solid credit rating (A) from the S&P. This allows Emerson Electric to issue cheap debt to expand operations and finance other initiatives.

One expansion to Emerson will be Intelligent Platforms. It’s a division of General Electric that the company has agreed to acquire. Emerson is a growing business and it’s rewarded shareholders with dividends.

10-Year Dividend History

The company paid investors $1.2 per share a decade ago. Over the last 10 years, the dividend has climbed to $1.92. That’s a 60% increase! You can see the annual changes below.

The compound annual growth is 4.8% over 10 years… but over the last year, the dividend climbed 1.1%. The slowdown in dividend growth isn’t a great sign. However, Emerson Electric still might be a decent income investment. Let’s take a look at the yield.

Current Yield vs. 10-Year Average

Emerson Electric’s long history of paying dividends makes it one of the top dividend stocks around. This also makes the dividend yield a great indicator of value. A higher yield is generally better for buyers. Sustainability is also vital, and we’ll look at that soon.

The dividend yield comes in at 2.49%, which is below the 10-year average of 3.67%. The chart below shows the dividend yield over the last 10 years.

The lower yield shows that investors have bid up the company’s market value. They might be expecting higher growth and payouts. But more often than not, the dividend yield is mean-reverting with share price changes.

Improved Dividend Safety Check

Many investors look at payout ratio to determine dividend safety. To do this, they look at the dividend per share divided by the net income per share. So a payout ratio of 60% would mean that for every $1 Emerson Electric earns, it pays investors $0.60.

Payout ratio is a good indicator of dividend safety… but accountants manipulate net income. They adjust for goodwill and other non-cash items. Free cash flow is a better metric.

Here’s Emerson Electric’s payout ratio based on free cash flow over the last 10 years.

The ratio is volatile over the last 10 years and the trend is up. The last reported year shows a payout ratio of 85.9%. This doesn’t give much wiggle room for Emerson Electric’s board of directors to raise the dividend.

Closing Thoughts on Emerson Electric’s Dividend History and Safety

Emerson Electric’s dividend history is giving long-term dividend investors a red light. Investors have bid up the share price and the yield is low. On top of that, the payout ratio is trending up and serves as a sign of future dividend safety.

If you’re interested in seeing more, please comment below. You can also check out our dividend reinvestment calculator.

Good investing,

Rob

The post Is the Emerson Electric Dividend Safe? Three Unique Charts… appeared first on Wealthy Retirement.

Business Overview and Highlights

Meredith (NYSE: MDP) is a $2.3 billion dollar business. The company is based out of Des Moines, IA, and it employs 7,900 people. Last year Meredith pulled in $2.2 billion in sales – that breaks down to $284,000 per employee.

The company runs within the communications sector and maintains a credit rating (B+) from the S&P. This allows Meredith to issue debt to expand operations and pay dividends.

One way the business expanded in the last year was by acquiring Time Inc, which was valued at $2.8 billion. The new revenue from Time Inc. might help with future cash flows. The company also paid another dividend last month.

10-Year Dividend History

Meredith paid investors $0.88 per share a decade ago. Over the last 10 years, the dividend has climbed to $2.13. That’s a 142% increase. You can see the annual changes below.

The compound annual growth is 9.2% over 10 years – but over the last year, the dividend climbed 4.9%. This slowdown in dividend growth isn’t a great sign. However, Meredith still might be a good income investment. Let’s take a look at the yield.

Current Yield vs. 10-Year Average

Meredith’s long history of paying dividends makes it one of the best dividend stocks around. This also makes its dividend yield a great indicator of value. A higher yield is generally better for buyers. Sustainability is also vital, and we’ll look at that soon.

Meredith’s dividend yield comes in at 4.24%, which is below the 10-year average of 4.66%. The chart below shows the dividend yield over the last 10 years.

The lower yield shows that investors have bid up the company’s market value. They might be expecting higher growth and payouts. But more often than not, the dividend yield is mean reverting with share price changes.

Improved Dividend Safety Check

Many investors look at payout ratio to determine dividend safety. To do this, they look at the dividend per share divided by the net income per share. So a payout ratio of 60% would mean that for every $1 Meredith earns, it pays investors $0.60.

Payout ratio is a good indicator of dividend safety, but accountants can manipulate net income. They adjust for goodwill and other non-cash items. Therefore, free cash flow is a better metric.

Here’s Meredith dividend payout ratio based on free cash flow over the last 10 years:

The ratio has been volatile over the last 10 years with an upward trend. This past year shows a payout ratio of 97.4%. This doesn’t give much wiggle room for Meredith’s board of directors to raise the dividend.

Closing Thoughts on Meredith’s Dividend History and Safety

Meredith pays a solid dividend, but it might not be the best stock to invest in. The trends show the dividend isn’t very safe for long-term investors.

If you’re interested in seeing more, please comment below. You can also check out more dividend investing articles by clicking here.

Good investing,

Rob

The post Meredith’s Dividend History and Safety appeared first on Wealthy Retirement.