Do not invest in companies that borrow to pay the dividend. Free Cash Flow takes into account operating cash flow less capital expenditures and is a much better statistic in the calculation of a realistic dividend payout ratio.
Invest in companies that are financially sound with a lower debt / equity level relative to their peers. Companies that are less levered are more likely to increase their dividends over time.
Invest in companies that consistently increase their dividends every year. As a general rule, do not invest in companies that offer high dividend yields with little dividend growth prospects.
Invest in companies with growing operating and free cash flows as this is more likely to lead to rising dividends. Companies that have a low dividend payout ratio are preferred.
As many companies cut their dividends in a recession, do not invest in cyclical companies where the dividend may be cut.
Dividend growth companies are the preferred choice for long term investors.