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Is this the cash flow situation that would drive a company to issue bonds?
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Please notice the high dividend yield as a result of the drop in price per share .
red flags:
1. High Risk: The high dividend yield could be an indicator of elevated risk. Often, companies with unsustainable dividends can see their stock prices decline.
2. Unsustainable Dividend: Sometimes a high yield is the result of a plummeting stock price, making the dividend percentage appear larger in relation to the stock’s current price. The company may not be able to maintain such a high dividend payment.
3. Market Sentiment: The significant drop in share price might suggest that the market has a negative view of the company’s future prospects.
4. Cash Flow Issues: If the company is paying out high dividends while its stock price is falling, it may not be reinvesting enough in the business, which could be a concern for long-term growth.
5. Value Trap: Sometimes a declining stock with a high dividend yield can seem like a good ‘buy,’ but it could be a value trap if the fundamentals of the company are deteriorating.
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