The Emperor was named Penguin, not to be confused with an actual penguin
Did the headline catch you? Good. When it comes to dividend income stocks, earnings are like the Emperor—don’t mistake them for just any old penguin. In the financial world, “income” or “revenue” is akin to all the penguins waddling around—the money that flows into the company from various sources like sales or services. However, just because there’s a large crowd of penguins doesn’t mean they all have the royal seal. Earnings, on the other hand, are what’s left after the company has fed, housed, and entertained all those penguins (i.e., covered expenses, taxes, and other costs). This net profit is the true Emperor, the ruler of the kingdom, because its what companies use to pay out dividends.
Now, imagine mistaking a common penguin (revenue) for the emperor (earnings)—you might think the company is swimming in cash when, in fact, it might be barely getting by after all expenses are paid. For dividend income investors, this distinction is crucial. The Emperor (earnings) determines whether the company can sustain and grow its dividends. Without strong earnings, those shiny dividends could slip away, leaving you with nothing but an empty, icy kingdom. So, while all penguins (revenues) are important, it’s the Emperor (earnings) that truly matters when you’re in the game for dividend income. In the Fly High Portfolio, you will find links to each companies’ latest Earnings statements filed in their respective SEC filings, you will also see a chart representing the next 12 months predicted earnings coverage. We go over each company’s earnings to ensure they belong in the Fly High 50 and can continue to maintain that dividend.