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PDL BioPharma: Beware The 8% Dividend

Whenever you find a stock that trades at just 4 times earnings and yields 8%, the warning lights should start going off. When a stock trades like that, it likely means that the company has issued some type of bad news and the ratios have yet to catch up. If that doesn't appear to be the case then you need to dig a little deeper.

PDL BioPharma (PDLI) appears to be one of those latter cases. Looking purely at the financial statements you'd probably get the sense that everything is just fine. An 8% dividend yield might on the surface appear like a steal. But in the case of PDL it's what's coming down the road that should be cause for concern for investors.

I like to look at four financial ratios in particular to help determine the health of a dividend. These ratios aren't designed to give a definitive… Read More …