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During the coronavirus slowdown, investors should look to companies with secure dividends for stability. Plus, it helps when the businesses have a history of growing their dividend yield.
"We have recommended that investors target safe, not just high, dividend yield – since before companies cut their dividends, yields tend to skyrocket," Bank of America equity and quant strategist Savita Subramanian told clients.
When looking for secure dividends, Bank of America looks for low leverage ratios, meaning there isn't piles of debt on the company's balance sheet. The firm also looks at low earnings variability, because stable earnings usually translate into a stable dividend. Finally, Bank of America looks at low payout ratios, which gives companies more wiggle room in a downturn.
The bank also looked at companies that have consistently grown their dividends each year over time. Bank of America screened for S&P 500 stocks that have consistently grown their dividends using data from 1980 to 2019.
Here's a list of Bank of America's buy rated stocks with "secure" dividends and a history of dividend growth.