Three ways to ‘stress test’ dividends

A juicy dividend is one of the best ways to beat inflation. But how do you know it isn't hiding something sinister? Tim Bennett explains three ways to test whether your dividend is safe.

Forget double-baggers. Right now, many investors would settle for finding a reasonably safe stock, that offers them a fighting chance of beating inflation. How hard can that be?

Sadly, it's a quest that's fraught with pitfalls. The biggest is that a firm offers you a juicy dividend as a bribe to buy its shares and then slashes it or even goes bust. So how do you find a solid dividend income that is also reliable?

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Tim graduated with a history degree from Cambridge University in 1989 and, after a year of travelling, joined the financial services firm Ernst and Young in 1990, qualifying as a chartered accountant in 1994.

He then moved into financial markets training, designing and running a variety of courses at graduate level and beyond for a range of organisations including the Securities and Investment Institute and UBS. He joined MoneyWeek in 2007.