dividend safety reality check

The problem

High dividend yields often mask deteriorating fundamentals, leading investors into yield traps. Relying solely on earnings payout ratios frequently ignores cash flow reality, resulting in unexpected dividend cuts.

What it does

• Calculates trailing and forward dividend yields to identify market-priced risk gaps.
• Analyzes Free Cash Flow (FCF) payout ratios to determine if dividends are funded by operations or debt.
• Applies sector-specific risk thresholds for REITs, Utilities, Energy, and Financials.
• Evaluates debt burdens and interest coverage to assess long-term payment sustainability.
• Assigns a safety rating from Reliable Income to Unsustainable based on multi-factor stress tests.

Why this beats prompting it yourself

Generic prompts often miss the nuance of sector-specific accounting, like using AFFO for REITs instead of EPS. This skill enforces rigorous FCF coverage checks and yield gap analysis that basic LLM queries typically overlook, preventing false positives on "cheap" stocks.

Use cases

• Perform due diligence on high-yield stocks to identify potential dividend cuts.
• Compare income stability between two competitors within the same sector.
• Audit a portfolio's dividend safety during changing interest rate environments.
• Screen new income opportunities against sector-adjusted payout benchmarks.