The Dividend School: Profit, Income, Cash Flow and Dividend Analysis

The Dividend School is a series of tutorials aiming to gear investors focusing on dividend stock investments to start dividend investing from scratch. Investors will acquire a solid grasp of the necessary skill set to plan, create and maintain a dividend portfolio as well as holistically analyze dividend stock investments.

Introduction

The life blood of dividends comes from the earnings and cash flow generated by the business. Many investors new to this would have been confuse by the terms thrown around:

1. What is the difference between income and cash flow?
2. What is EBITDA and Free Cash Flow?
3. Which metric tells me the dividend is safe?
4. How do I find out these figures?

Comprehensive explanation on Net Profit, EBITDA, Operating Cash Flow and Free Cash Flow

2 years ago, we compile a guide to explain the relationship between these often use terms. The feedback we get is, while it is useful it is missing certain information such as where investors can source these figures to help them compile a profile to analyze the sustainability of the dividends.

We did a revamp by updating the article with what we have gain since this 2 years of dividend investing.

The result are the following topics

1. Why do we want to know Net Profit, EBITDA, Operating Cash Flow and Free Cash Flow?
2. What are their definition?
3. What is the formula to derive these metrics?
4. Where can you find them in the annual report?
5. The role of depreciation and amortization in relation
6. The difference between maintenance and investment capital expenditure
7. Cash for Management – a comprehensive metric to determine sustainable dividend
8. What are the signs of healthy and unhealthy cash flows

This tutorial is applicable for investors looking to grasp the fundamental concepts require to dissect and analyze financial statements to evaluate profitability and dividend sustainability.

Net Profit, EBITDA, Operating Cash Flow and Free Cash Flow in Dividend Investing >> 

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Kyith

Kyith is the Owner and Sole Writer behind Investment Moats. Readers tune in to Investment Moats to learn and build stronger, firmer wealth foundations, how to have a Passive investment strategy, know more about investing in REITs and the nuts and bolts of Active Investing.

Readers also follow Kyith to learn how to plan well for Financial Security and Financial Independence.

Kyith worked as an IT operations engineer from 2004 to 2019. Currently, he works as a Senior Solutions Specialist in Insurance Start-up Havend. All opinions on Investment Moats are his own and does not represent the views of Providend.

You can view Kyith's current portfolio here, which uses his Free Google Stock Portfolio Tracker.

His investment broker of choice is Interactive Brokers, which allows him to invest in securities from different exchanges all over the world, at very low commission rates, without custodian fees, near spot currency rates.

You can read more about Kyith here.

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