Anyway, CenturyLink’s DIVCON score is a 1, the lowest.
I then checked the score for another company that hasn’t cut its dividend: New York Community Bancorp NYCB, +1.14% The bank has paid a dividend of 25 cents a share for 46 straight quarters. That translates to an attractive yield of 5.54%. based on Friday’s closing price of $18.06. CEO Joseph Ficalora has said repeatedly that NYCB is “genuinely committed to the dividend.”
Despite the bank’s long track record of stellar loan quality, the potential problem is that its earnings per share have ranged from 27 cents to 30 cents over the past four quarters. The dividend is covered, but not by much. Part of the company’s strategy is to keep its total assets below the $50 billion threshold, at which the bank would be considered a “systemically important” financial institution by federal regulators. Carrying that designation means regulators could force a dividend cut. The bank had $48.7 billion in total assets as of June 30.
New York Community Bancorp’s DIVCON score is 2.
Reality Shares will soon launch three exchange traded funds based on three indexes. The DIVCON Leaders Index focuses on S&P 500 companies with the highest DIVCON scores. The DIVCON Defender Index focuses on a hedging strategy, with long-term positions for companies with DVICON 5 scores and short positions for those scoring DIVCON 1. The DIVCON Guardian Index mixes the approaches of the other two indexes, based on Reality Shares’ Guardian Gauge.
An ETF dividend strategy with ‘no market exposure’
Reality Shares currently runs the Reality Shares DIVS ETF DIVY, +0.00% As its name and ticker imply, the fund is focused on dividends. But rather than invest in stocks, it invests in derivatives that go up in value if selected S&P 500 companies raise their dividends. The fund has been around only since Dec. 18, 2014, but since inception, it is up 2.6%, which is good performance when measured against the S&P 500’s decline of 3.7% (with dividends reinvested).
“There is no market exposure,” Ervin said. “It is just based on the growth of dividends. If the S&P 500’s dividends grow, and historically they do at about 8% a year, this fund will perform in line with that.”
So the ETF is meant to be a conservative investment with much less volatility than the stock market.