A high dividend yield by itself is not a sign of safety. Sometimes, a stock yields more only because the price has collapsed for a valid reason. Sometimes, the market is signalling that the dividend is unsustainable. And sometimes a management that has cash to reward shareholders simply chooses not to do so. Dividend investing, therefore, is not about buying the highest yield on the screen. It is about judging the credibility of that yield. The first test is the company’s dividend record. Has it paid consistently across cycles? Has it treated dividend as a regular shareholder return tool, or as a sporadic gesture during good years?
