http://www.researchaffiliates.com/Our Ideas/Insights/Fundamentals/Pages/428_The_Market_for_Lemons_A_Lesson_for_Dividend_Investors.aspxSorting the lemons from the cherries.
"Although the high-yield portfolio delivered both higher dividend yield and total return, it also had a higher percentage of delisted companies1 and slower dividend growth. So if not every cheap dividend (i.e., the dividend paid by a cheap equity) is a bargain, can we avoid the lemons? Yes! For dividend-yield investors, three characteristics help us judge the quality of the companies that offer high dividend yields: profitability, distress, and accounting red flags that can indicate poor management, sometimes extending to fraud."
