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.

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I’m talking about free cash flow-to-enterprise value, or FCF/EV.

It’s not a flashy metric. You won’t hear it tossed around on financial TV or splashed across brokerage reports. But it’s the number that tells us, more than any other, whether we’re looking at a genuine bargain or a value trap.

It’s also why The Value Meter so often spots cash-rich, underpriced businesses that others miss.

Free cash flow is the cash a company has left over after paying its bills and maintaining its business. It’s the real money that can be used to pay dividends, buy back stock, or reduce debt.

Enterprise value, on the other hand, represents what it would cost to buy the whole company – equity, debt, and all – while subtracting cash.

When we divide one by the other, we find out how much cash a business produces for every dollar it would cost to own it outright.

That’s why FCF/EV is the truest “earnings yield” there is. It ignores accounting games, one-time gains, and headline noise. It’s the simplest measure of what really matters: how efficiently a company converts its resources into spendable dollars.

This isn’t a theory we dreamed up in isolation, by the way. Some of the biggest and most disciplined investors in the world rely on this same approach.

AQR Capital, a quantitative giant managing more than $100 billion, includes free cash flow-to-enterprise value as a core factor in its long-term value strategies. AQR’s research shows that companies with high FCF/EV consistently outperform those with low FCF/EV, even after adjusting for size, leverage, and industry.

S&P Dow Jones has also leaned into this principle. In 2024, it launched the S&P Quality Free Cash Flow Aristocrats Index, which screens for companies that generate strong and stable cash flows relative to their assets.

The results speak for themselves. These stocks have shown greater resilience during market drawdowns and stronger returns over full cycles.

Meanwhile, investors can see the power of this metric in real-world performance. The Pacer U.S. Cash Cows 100 ETF (BATS: COWZ), which ranks companies purely by FCF/EV (also called FCF yield), has beaten the Russell 1000 Value Index by roughly seven percentage points per year over the past five years.

That’s not luck. That’s free cash flow doing its job by identifying businesses that generate real money relative to what they cost.

Traditional measures like price-to-earnings or price-to-book simply can’t compete. Earnings can be massaged with creative accounting, and book value has lost its meaning in a world where the most valuable assets – software, patents, and brands – don’t appear on a balance sheet.

Cash is unambiguous. It doesn’t need interpretation.

When a company consistently produces more free cash than its peers for every dollar of enterprise value, it’s usually because it runs a better business, not because of financial smoke and mirrors.

This is why FCF/EV sits at the heart of The Value Meter.

The other metrics we use – free cash flow-to-net asset value and enterprise value-to-net asset value – tell us how efficiently a business converts its assets into cash and how expensive those assets have become. But FCF/EV ties it all together. It’s the ratio that tells us what we’re paying for the company’s ability to produce real, recurring cash. It’s our “truth serum.”

The takeaway is simple: In a market full of noise, cash flow remains the one number that can’t be faked. It’s the most direct signal of whether a business truly earns more than it spends.

That’s why free cash flow-to-enterprise value isn’t just another ratio – it’s the cornerstone of how we find genuine value. And it’s why it will stay at the center of The Value Meter long after price-to-earnings ratios are no longer relevant.

The post The Valuation Metric That Beats All Others appeared first on Wealthy Retirement.

It’s too bad the Poinciana Tazbots aren’t still together, because Cracker Barrel could use the extra business to help fund its 8% dividend yield. Is the company serving up enough Chicken n’ Dumplins to continue to pay shareholders that strong of a dividend?

Free cash flow has been heading the wrong way since the initial rebound after the pandemic.

Even though revenue has increased every year since 2021, gross margins have slipped and operating margin has dropped dramatically, which has squeezed profits and – as a result – cash flow.

In fiscal 2023, which ended in July, Cracker Barrel’s free cash flow totaled $123.5 million. Meanwhile, it paid out $116.1 million in dividends for a too-high payout ratio of 94%.

In other words, for every dollar in cash flow that the company generated, it paid shareholders $0.94. Most of the time, I like to see a payout ratio of below 75%. That way, if free cash flow falls, the company can still afford its dividend.

That’s exactly what concerns me here.

In 2024, Cracker Barrel’s free cash flow is forecast to drop to $114.5 million. In the first two quarters of fiscal 2024, it has paid $58.3 million in dividends. If it pays the same amount over the next two quarters, its total amount paid in dividends will be greater than its free cash flow, which is something we never want to see.

Up until the pandemic, Cracker Barrel had done a good job of consistently raising the dividend. Starting in 2003, its total payout grew every year for nearly two decades, and the company also occasionally paid some big special dividends.

But when the pandemic hit, Cracker Barrel suspended its dividend for a year, beginning in the summer of 2020. When it resumed paying a dividend in August 2021, it lowered it from $1.30 per share to just $1.

In January 2022, the quarterly dividend was raised back to $1.30 per share, which is where it sits today.

With cash flow declining and the total dividend payout expected to exceed free cash flow, we have to consider Cracker Barrel’s dividend far less reliable than its meatloaf.

Dividend Safety Rating: D

If you have a stock whose dividend safety you’d like us to analyze, leave the ticker symbol in the comments section below.

You can also take a look to see whether we’ve written about your favorite stock recently. Just click on the word “Search” at the top right part of the Wealthy Retirement homepage, type in the company name and hit “Enter.”

Also, keep in mind that Safety Net can analyze only individual stocks, not exchange-traded funds, mutual funds or closed-end funds.

The post Send Cracker Barrel’s 8% Yield Back to the Kitchen appeared first on Wealthy Retirement.

When most investors hear “biotech stocks,” they think of small, unprofitable companies that often don’t even have revenue yet because they don’t have any approved products.

There are lots of biotech companies like that. They need to invest every dollar they have into developing their medicines, so they aren’t able to pay a dividend.

But there are also some mature biotech companies that are very profitable and cash flow positive and can afford to pay dividends.

Amgen (Nasdaq: AMGN) is one of them.

The company pays a $2.25 per share quarterly dividend, which comes out to a 3.3% yield. Biotech can be notoriously volatile, though, so can investors count on receiving the same dividend quarter after quarter?

Amgen’s free cash flow slid from $8.8 billion to $7.4 billion last year. That is something Safety Net does not want to see. Declining free cash flow can be an early sign that a company might struggle to afford its dividend, and Amgen’s one-year and three-year free cash flow growth are both negative.

Fortunately, free cash flow is forecast to leap to $13.3 billion this year. Even if that prediction is way off, this year’s free cash flow will still likely be higher than last year’s (and probably 2022’s as well).

Despite the down year in 2023, Amgen was still easily able to afford its dividend. It paid shareholders $4.6 billion for a 62% payout ratio.

In 2024, it’s estimated that the total amount paid in dividends will rise to $4.9 billion. And thanks to the expected jump in free cash flow, the payout ratio should drop to just 37%.

Amgen has also raised its dividend every year since it began paying one in 2011, so it has a strong track record of not only paying the dividend, but boosting it year after year.

As long as free cash flow does in fact grow this year, dividend investors should have nothing to worry about. But if free cash flow doesn’t increase in 2024, investors will need to start watching the stock more carefully.

Dividend Safety Rating: B

If you have a stock whose dividend safety you’d like us to analyze, leave the ticker symbol in the comments section below.

You can also take a look to see whether we’ve written about your favorite stock recently. Just click on the word “Search” at the top right part of the Wealthy Retirement homepage, type in the company name and hit “Enter.”

Also, keep in mind that Safety Net can analyze only individual stocks, not exchange-traded funds, mutual funds or closed-end funds.

The post Is Amgen the Rare Biotech With a Safe Dividend? appeared first on Wealthy Retirement.

We normally wouldn’t cover the same stock in The Value Meter and Safety Net within a week. But several of you asked us to evaluate Pfizer in both columns, so we thought it’d be valuable to take a look at it from both a value angle and a dividend angle.

Remember, a stock’s valuation and its dividend safety can be very different. Be sure to gather as much information as possible before buying a stock, and always consider which strategies are the best fit for you and your investing goals.

– Rachel Gearhart, Publisher

COVID-19 put a lot of companies in the spotlight.

Cruise companies like Carnival (NYSE: CCL) found themselves without any customers…

And tech companies like Zoom Video Communications (Nasdaq: ZM) and Teladoc Health (NYSE: TDOC) found a sudden windfall of cash…

But no company shined more than the vaccine makers Moderna (Nasdaq: MRNA) and Pfizer (NYSE: PFE).

Back in 2021, Marc covered Pfizer and gave it a fantastic dividend safety rating of “A.”

But that was back then. This is now.

As Director of Trading Anthony Summers showed you on Friday, Pfizer’s stock may no longer be the golden child it used to be for your portfolio.

Perhaps it’s a different story when it comes to Pfizer’s dividend, though. The company currently pays a quarterly dividend of $0.42, which equates to a very nice annual yield of 6.3%.

Is the dividend still as trustworthy as it was in 2021? Let’s dive into the numbers…

Pfizer’s stock had a particularly awful 2023, losing nearly half of its value.

Much of that decline was fueled by a massive drop in revenue.

And where there’s a drop in revenue, we’ll almost certainly see a drop in free cash flow.

In 2022, Pfizer’s free cash flow was $26 billion.

Fast-forward to 2023, and we see that it fell to only $4.8 billion.

That’s an 81.6% drop in just one year. And it has me seeing red flags all over.

On top of that, the decline in free cash flow resulted in a 194% payout ratio for the company.

That’s well above our 75% threshold.

The culprit for Pfizer’s struggles is the decreased demand for COVID vaccines. Plain and simple.

In 2020, Pfizer’s cash from operations amounted to $14.4 billion.

The following year, that figure more than doubled to over $32.6 billion as the Pfizer COVID vaccine was approved and distributed.

The company also massively increased its capital expenditures to keep up with the booming demand.

But as demand dried up over the last few years, Pfizer was left holding the bag.

The only saving grace for this dividend is that it has risen in each of the last 15 years.

So it may not be the riskiest dividend I’ve reviewed in this column…

But it’s still far from safe.

Dividend Safety Rating: D

If you have a stock whose dividend safety you’d like us to analyze, leave the ticker symbol in the comments section below.

You can also take a look to see whether we’ve written about your favorite stock recently. Just click on the word “Search” at the top right part of the Wealthy Retirement homepage, type in the company name and hit “Enter.”

Also, keep in mind that Safety Net can analyze only individual stocks, not exchange-traded funds, mutual funds or closed-end funds.

The post Beware This Biotech’s 6.3% Dividend Yield appeared first on Wealthy Retirement.

At the time, the company’s free cash flow growth was terrible, its payout ratio was too high and its dividend was so unpredictable that it was impossible for investors to rely on it for consistent income.

But that was nearly a year ago.

A lot can happen in a year. Perhaps the company has turned the ship around.

After all, 2021 was a fantastic year for Sturm, Ruger & Co. So maybe the analysts were wrong about their 2023 projections and it hit the bull’s-eye this year.

That’s what we’re aiming to find out today.

The first thing we always look at when it comes to dividend safety is the company’s free cash flow – specifically, whether it’s expected to increase or decrease from where it was in previous years.

While there are no estimates available for free cash flow in 2023, we can use other factors to make our prediction. Now that we’re nearing the release of the company’s annual report, analysts have a much better idea of where its financials stand relative to where they were last March.

There’s no doubt 2022 was a rough year for the company…

And it doesn’t look like 2023 will be any better.

Net income is projected to be nearly cut in half from $88.3 million to $49.9 million.

And revenue is expected to drop by almost $50 million – from $596 million to $547 million. That’d be a drop of 8.2% over the past year after an 18.5% decline from 2021 to 2022.

Unless the company can pull off some sort of miracle in its full-year earnings report, its 2023 revenue will likely be its lowest since 2019 – especially when you consider that it reported free cash flow of -$11.3 million for the third quarter of 2023.

On top of all of this, Sturm, Ruger & Co. has a variable quarterly dividend.

Rather than paying shareholders a consistent, fixed amount, the company determines its dividend based on how it performs each quarter.

The company’s practice is to pay out approximately 40% of its net income every quarter.

So if its net income were to drop by half from one year to the next (as is projected for 2023), your dividend could also be cut in half.

If there’s one bright spot in the company’s financials, it’s the payout ratio. I don’t think that will be a problem over the next year.

But with revenue and net income continuing a downward trend, I have no choice but to reaffirm Marc’s assessment from last March and give its dividend safety another “F.”

Dividend Safety Rating: F

If you have a stock whose dividend safety you’d like us to analyze, leave the ticker symbol in the comments section below.

You can also take a look to see whether we’ve written about your favorite stock recently. Just click on the word “Search” at the top right part of the Wealthy Retirement homepage, type in the company name and hit “Enter.”

Also, keep in mind that Safety Net can analyze only individual stocks, not exchange-traded funds, mutual funds or closed-end funds.

The post Is Sturm, Ruger & Co. Staring Down the Barrel of a Dividend Cut? appeared first on Wealthy Retirement.

But can the Israeli company keep it up?

Over the last four quarters for which we have data (the company has not yet released its fourth quarter results), Magic Software generated $80 million in free cash flow. It paid $30.8 million in dividends over that span for a nice low payout ratio of 39%.

That means the company is paying out just $0.39 in dividends for every dollar in free cash flow, so it can comfortably afford its dividend. (Remember, I use free cash flow rather than earnings to calculate a company’s payout ratio because it’s easier for management to manipulate earnings numbers.)

Magic Software is a small cap stock with a market cap under $500 million. As a result, only two sell-side analysts cover the stock, and they have not published free cash flow estimates for 2024. So we’ll have to make our own assumptions.

Earnings are projected to be flat this year, while revenue is forecast to decline by 10%. Since earnings are expected to be flat and management has not provided any guidance so far, we’ll assume that free cash flow will also be flat.

The company has reduced its dividend a few times in recent years. In 2022, the dividend dipped from $0.234 to $0.216 per share, and in 2020, it was nearly cut in half from $0.156 to $0.08 per share.

All in all, there have been seven cuts in the past 10 years, with the others coming in 2014, 2015, 2016 and 2019. So while the overall trend has been higher, there have been periods when the dividend was reduced for a short time.

The company can easily afford its dividend based on the trailing 12 months numbers, but it has shown a willingness to cut the dividend on a fairly regular basis.

Even if Magic Software sustains its dividend in the near term, I wouldn’t get too comfortable with it.

Dividend Safety Rating: D

If you have a stock whose dividend safety you’d like us to analyze, leave the ticker symbol in the comments section below.

You can also take a look to see whether we’ve written about your favorite stock recently. Just click on the word “Search” at the top right part of the Wealthy Retirement homepage, type in the company name and hit “Enter.”

Also, keep in mind that Safety Net can analyze only individual stocks, not exchange-traded funds, mutual funds or closed-end funds.

The post Will Magic Software Cut Its 6.7% Dividend Yield? appeared first on Wealthy Retirement.

That age-old adage means you shouldn’t try to buy a stock when it’s tumbling down, because trying to perfectly time the bottom is incredibly difficult.

Such was the case with industrial and aerospace manufacturer Barnes Group (NYSE: B) after its most recent earnings report.

The company missed earnings expectations on October 27, which sent its stock tumbling over 30% in one day. It fell from the previous day’s close of $29.98 to a low of $19.96.

Oftentimes, when a stock takes a tumble, it keeps falling. But with Barnes, we soon saw a reason to be bullish again.

Over the next week, Barnes Group CEO Thomas Hook bought $2.6 million worth of stock, increasing his stake in the company by 166%.

And six other insiders have bought a total of nearly $1.4 million worth of shares since late October.

Insider buying is a major sign that executives still believe in their company. And Wall Street noticed the activity.

In fact, despite the single-day 30% drop in October, the stock has risen back to its previous levels in under two months’ time. It’s now sitting at over $30.

Investors and insiders clearly believe that the market overreacted to the October 27 earnings results.

But how do they feel about the dividend?

The company currently pays a quarterly dividend of $0.16, which equates to a yield of around 2.14%.

That may not seem like much compared with other dividends we’ve reviewed in the past…

But Barnes has a lot going for it.

Its free cash flow is expected to have grown over 70% since 2022, from $40.5 million to $68.9 million…

It hasn’t cut its dividend within the past 10 years…

And its payout ratios look good.

The only thing that knocks it down a peg is that its three-year free cash flow is estimated to be down over 60% from 2020 to 2023.

There’s a reasonable explanation for that, though.

Barnes Group is still trying to recover from the business and sales disruptions that were caused by the COVID-19 pandemic.

And thanks to cost-cutting measures the company introduced in 2022, it has regained some of its lost revenue this year and its prospects are looking up.

But don’t take it from me…

Take it from the insiders who know the company like the back of their hand and have snatched up millions of dollars’ worth of shares for themselves.

They’ll be rewarded with a modest but safe dividend.

Dividend Safety Rating: B

If you have a stock whose dividend safety you’d like us to analyze, leave the ticker symbol in the comments section below.

You can also take a look to see whether we’ve written about your favorite stock recently. Just click on the word “Search” at the top right part of the Wealthy Retirement homepage, type in the company name and hit “Enter.”

Also, keep in mind that Safety Net can analyze only individual stocks, not exchange-traded funds, mutual funds or closed-end funds.

The post Barnes Group: Is Heavy Insider Buying a Good Sign for Its Dividend? appeared first on Wealthy Retirement.

The stock currently yields 4.5%. But can it continue to pay its $0.57 per share quarterly dividend despite an expected decline in its free cash flow next year?

Bristol Myers Squibb has 35 approved drugs, including well-known names like blood thinner Eliquis and cancer fighters Opdivo and Revlimid.

This year, revenue and earnings are forecast to dip, though free cash flow is projected to grow considerably from 2022’s total. However, next year, while earnings are expected to recover, free cash flow will drop, according to Wall Street analysts.

In the Safety Net model, there is no sin bigger than falling cash flow.

However, the drug giant’s other numbers are very solid. The company will likely pay out about $4.6 billion in dividends this year, which is just 30% of its expected free cash flow. Next year’s predicted $4.8 billion in dividend payouts should result in a payout ratio of just 33%.

Those numbers are quite low and make the dividend quite affordable.

Should free cash flow continue to head south in 2025, the company’s dividend safety would likely get a downgrade. But given Bristol Myers Squibb’s low payout ratio and its strong track record of 14 straight years of dividend increases and 44 straight years without a dividend cut, the current dividend is very safe.

Dividend Safety Rating: A

If you have a stock whose dividend safety you’d like me to analyze, leave the ticker symbol in the comments section. You can also take a look to see whether I’ve written about your favorite stock recently. Just click on the word “Search” at the top right part of the Wealthy Retirement homepage, type in the company name and hit “Enter.”

The post Can Bristol Myers Squibb Keep Its Streak Alive? appeared first on Wealthy Retirement.

Last year Spok announced a 150% increase in its dividend, which has a healthy 7.88% yield as I write. And the company plans to focus on increasing free cash flow, which would be a boon for all of its investors.

So everything seems to be looking up… right?

Well, once we start to peel back the layers a bit, we can see that there’s a lot more to the story.

The first red flag is that despite a big jump in 2020, the company’s free cash flow fell 61% from 2019 to 2022. That included a 25% drop from 2021 to 2022.

Ouch! Falling free cash flow is never a good sign for dividend investors. That’s strikes one and two for Spok’s dividend safety rating.

However, there was a pretty good reason for that steep decline…

Spok’s business was hurt significantly by the COVID-19 pandemic. That’s why the company took action in February 2022, releasing a new strategic business plan.

As part of Spok’s renewed commitment to cutting costs and maximizing free cash flow, it discontinued its Spok Go communication platform, which had seen limited demand as a result of the pandemic. The company also decided to increase its dividend payout by 150%.

While that all may sound good, the company’s free cash flow is still nowhere near a level that would allow it to safely maintain its dividend.

Our rule of thumb is that we like a stock’s dividend payout ratio to be less than 75%.

In 2022, Spok had a 926% payout ratio – over 12 times higher than our benchmark.

Analysts are projecting free cash flow to grow significantly and hit $23.3 million in 2023. But even if they’re correct, that still wouldn’t be enough to cover Spok’s expected dividend payout of $25 million.

Paying out more cash to shareholders than the company is bringing in the door is simply not sustainable over the long term.

Spok would need to generate $33.3 million in free cash flow to hit our benchmark of a 75% payout ratio. That’s $10 million above the expected figure.

Now, Spok has a couple of things going for it. It has never cut its dividend, and it occasionally issues a special dividend to its shareholders as a gesture of goodwill.

But that doesn’t change the company’s free cash flow situation.

It’s possible that Spok will eventually revitalize its business and recapture the success of its pre-2016 glory days.

But until we see some actual results, the company is way too volatile for its dividend to be considered safe.

Dividend Safety Rating: F

If you have a stock whose dividend safety you’d like us to analyze, leave the ticker symbol in the comments section.

You can also take a look to see whether we’ve written about your favorite stock recently. Just click on the word “Search” at the top right part of the Wealthy Retirement homepage, type in the company name and hit “Enter.”

Also, keep in mind that Safety Net can analyze only individual stocks, not exchange-traded funds, mutual funds or closed-end funds.

The post Will Spok Holdings Be Able to Afford Its Dividend? appeared first on Wealthy Retirement.