1) Income “Payouts rise over time (dividend hikes)” ... not necessarily so. Sometimes, the dividends are reduced or eliminated.
5) “Dividends + price appreciation compound” except when they don’t, because the company suspended its dividend, and the price per share dropped.
I get that the author is big on dividend stocks, but he’s being a little dishonest. That’s bad.
Cuts or suspensions in dividends can certainly happen, but that depends to an extent on the size/stability of the company and economic conditions. The facts show that dividend cuts occur at a rate of less than 2% with stable companies in a typical year. Of course, economic stress can increase the likelihood of a cut, but over time its a relatively small number.
That said, the big problem with cuts is that they can negatively affect the stock price in a big way so you run the risk of losing money in the value of the stock.
It advisable to keep an eye on a company’s pay out ratio, its free cash flow, and other measures of financial health.