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The Dividend Investor: A practical guide to building a share portfolio designed to maximise income by Rodney Hobson

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Chapter 7. Profits, Dividends and Cash Flow

You don’t need complicated mathematical calculations or fancy trading systems to begin to invest for dividends. Basic analysis is not rocket science. The most important figures are quite simple and blindingly obvious. Start by asking three basic questions:

  1. Does a company have a track record of producing steadily rising profits?
  2. Does it have a track record of steadily rising dividends?
  3. Does it generate cash to pay those dividends?

In this chapter we will look at these three questions in turn.

1. Profits

In the end, dividends are paid out of profits. If a company is not making a profit it is unlikely to pay a dividend and even if it does the pleasure will be short-lived. While a company ...

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