Developed market bonds are at risk as short end yields rise. In this scenario, sometimes looking for sustainable yields becomes a bit tricky. What helps provide a stock sustainability to the dividend is the positive and growing free cash flow. This cash flow is very important and a key concept for dividend investors because the amounts are paid out of cashflows. Since accrual-based accounting smoothens data over a long period of time and may not give an accurate representation of its ability to pay dividend hence free cash flow is considered superior to earnings. In a case where a company is paying large amounts in capex, the sustainability of the dividend could be in danger while earnings might still be depicted to be high.
There can be two factors which can be considered when looking at free cash flow, firstly, it is the profitability ratio and second is the free cash flow yield which is a value factor. If one must combine high dividend yield with free cash flow, it has historically led to increased sustainability and comparatively higher returns. On the other hand, free cash flow yield compares the market value of the equity to the free cash flow, which implies how much free cash flow you are getting for each dollar spent on the stock.
Sigma Healthcare Limited (ASX: SIG) is a dividend stock trading at a market price of $0.485, as at mid-day trading on July 18, 2018. The stock has a dividend yield of 10.5% which is fully franked. In terms of distribution the stock has recently paid a dividend of 2.5c with ex-dividend date of April 05, 2018 and dividend pay date of April 20, 2018. The stock has been paying regular dividends over the past five years. The stock has a P/E of 8.480 and the EPS of 0.056 AUD and is trading near its 52-week low. While the stock may not be a great opportunity for a punt in view of trading volatility witnessed lately, but the key aspect is the dividend payments that have continued.
Genworth Mortgage Insurance Australia Limited (ASX: GMA) is another dividend stock, which traded at a market price of $2.535 (July 18, 2018, mid-day) and is near its 52-week low. The annual dividend yield of 9.6% is fully franked, and the most recent dividend declared was of 12c with ex-dividend date as March 01, 2018…
I'm not familiar with these 3 stocks but all have shown significant price volatility, albeit they're near historical lows currently.
Closer to home, have you looked at the Doric Nimrod stable. Essentially preference shares with c. 8% running yields with prospect of capital appreciation towards maturity (equally a risk of capital loss!). Doric Nimrod Air One (LON:DNA), Doric Nimrod Air One (LON:DNA)2, Doric Nimrod Air One (LON:DNA)3 and £AA4 own predominantly A380's on long leases to Emirates. £AA4 has some diversification of aircraft type which may be worth paying more for, since we all know that the A380 has not been a success commercially and the headline risk is probably the end of lease residual values. The comprehensive quarterly and annual reports (released this week) include commentary on these factors and there's occasional discussion on ADVFN. Institutions rather than PI's predominate I believe.
