If you are following a fixed income investing strategy so that you can live off the cash produced by your investments, you may want to consider looking beyond a stock's dividend yield.
Why? Take General Motors. In early February, 2006, the company announced that it was cutting its annual dividend more than fifty percent (50%)! The dividend yield prior to the announcement was 8%+. If you were living on a fixed income and depended upon that cash to pay your living expenses, losing half of your annual income would be devestating. Yet, had you focused on the operating performance of GM, you would have steered clear of the stock. Long term, you want to make sure that the dividend payout ratio isn't grossly exceeding reported net income as that situation isn't sustainable.
