It was June 2015, and I had just quit my job as an investment analyst. This was four kids and one mortgage ago, so in hindsight, I probably carried more of a teenage-like aura of invincibility than I realized as I stepped into the Wild West of starting an online business.
I knew I wanted to stay in the investing world that I loved. But I had woken up to the reality that very few fund managers beat the market over the long run. The more my eyes were opened to this truth, the less my heart was in it. I needed a new direction.
That inner turmoil led to the idea to start a website focused on dividend investing. After all, the Cokes and Exxons were the types of companies my conservative investment philosophy favored. And instead of trying to help pension funds and endowments beat the market, I could focus on helping everyday investors build rising income streams for retirement.
My wife Marie graciously supported my decision to walk away from the comfortable path, and the hunt for a domain was on. With more enthusiasm than marketing savvy, I rushed to buy SafeDividendStocks.com.
Taken. An attorney had purchased the domain just four days earlier and offered to sell it to me for $300, which he explained was the hourly rate he billed his clients. In hindsight, it was a fair offer. But every dollar felt like it mattered.
After my $75 counteroffer was rejected, Marie suggested a much better name — at no charge. Two months later, Simply Safe Dividends launched to the sound of crickets.
At the time, I had no idea how important the word "Safe" would become. Over the past decade, as more than 900 dividend cuts have rolled in, helping investors avoid dividend cuts has become the defining focus of our work.
Our Dividend Safety Scores have existed since day one, but the process behind them has evolved a lot. Studying hundreds of dividend cuts across the market taught us where the real risks tend to show up.
Before getting into the market environment, I want to share an insight we recently uncovered and are now incorporating into how we monitor dividend safety.
Our goal has always been to get as far ahead of dividend cuts as possible. We do that by demanding every company maintain an adequate margin of safety to withstand a moderate recession without jeopardizing its dividend.
No one knows when the next downturn will arrive or how severe it will be. But waiting to downgrade scores only after conditions deteriorate defeats the purpose. If a dividend can survive today but not a downturn, it doesn't belong in our Safe or Very Safe categories.
The pandemic provided the first real stress test of this approach. In 2020, 25% of stocks in our coverage universe at the time (334 out of 1,313) cut or suspended their dividends.
After the dust settled, we analyzed how our Dividend Safety Scores looked before the pandemic began and how those companies ultimately fared. The table below shows each stock's rating as of January 2020 and whether it went on to cut or suspend its dividend that year.
The results were clear. While 51% of stocks rated Very Unsafe or Unsafe at the start of 2020 cut their dividends, only 10% of Safe-rated and 4% of Very Safe-rated companies did so.
Put another way, across our Safe and Very Safe buckets leading into the pandemic, 93% of companies maintained or raised their dividends during one of the most severe economic shocks in history.
Those ratings had no way of anticipating a global pandemic. Even so, our pre-pandemic scores did a solid job identifying which dividends were most likely to hold up under pressure before it arrived.
We found similar results when looking at the 200 dividend cuts that took place between 2021 and 2025. This time, we evaluated each company's Dividend Safety Score one year prior to its cut announcement, rather than immediately before the cut.
Only 21 of those companies, or about 10%, carried a Safe or Very Safe rating one year earlier. Of that group, just two were rated Very Safe, and over half scored 70 or lower at the time.
Looking at the data another way, less than 5% of Safe and Very Safe-rated stocks during this period cut their dividends within a year of holding that rating. That compares to a roughly 30% cut rate across all other companies in our coverage universe.
A small number of these cuts were difficult to anticipate, including First Republic (2023 bank crisis), Hawaiian Electric (wildfires), HollyFrontier (opportunistic acquisition), W.P. Carey (decision to spin off offices), and Fidelity National (prioritizing buybacks).
But in every case, reviewing what changed leading up to the cut has been valuable. To do that properly, we went back and analyzed what was shifting beneath the surface well before those cuts occurred.
That included reviewing our internal dashboards of financial metrics and how they evolved over time, which reinforced one of our core challenges: striking the right balance between score stability and early warning.
We could get further ahead of more cuts by downgrading scores sooner, perhaps when a payout ratio first moves from 30% to 40%. But while some companies continue to deteriorate from there, most recover. Downgrading too quickly would lead to a lot of frustrating headfakes for you.
The encouraging takeaway from our review was that we found a way to improve our early-warning process without sacrificing the stability that makes the scores useful.
One promising signal emerged when we took a closer look at credit ratings, which we added across the site last year through our expanded relationship with S&P.
Credit ratings don't change often. And when push comes to shove, most companies will prioritize protecting their ratings over protecting their dividends.
Rebuilding a full history of credit rating actions took time. But once we paired that data with our dividend cut history, something stood out.
In reviewing a few dozen higher-risk cases, we found that in roughly half of them, S&P had already downgraded the company's credit rating outlook before we moved the stock out of our Safe bucket, often by several months.
What mattered most wasn't the rating itself, but changes to the rating outlook. Actual rating downgrades often came only after significant damage had already been done. And many dividend cutters still carried ratings several notches above junk, reflecting a strong incentive to preserve the status quo rather than simply maintain any investment-grade label.
Going forward, we now receive internal notifications as soon as S&P downgrades a company's credit rating outlook. These events are relatively rare, occurring only a few dozen times per year across our coverage universe. But we believe this added signal can help us identify rising dividend risk earlier while avoiding many unnecessary headfakes.
We will never be perfect. But I want you to know that we take this responsibility seriously. Your trust means a great deal to us, and protecting your income is something we don't take lightly.
As we look ahead to 2026, dividend investing remains out of favor, while market leadership is narrowly concentrated in firms tied to artificial intelligence. My views on that haven't changed since our last newsletter, but stretches like this are often when sticking to the basics matters most.
We don't try to predict when momentum will shift or which narrative will dominate next. Instead, we remain focused on helping you stay the course with safe, growing dividends that can compound reliably over time, even when they aren't in the spotlight.
Thank you for your support of Simply Safe Dividends, and please reach out with any questions or ideas for how we can keep improving the service for you.
