The following video is part of our "Motley Fool Conversations" series, in which industrials editor/analyst Brendan Byrnes and consumer goods editor and analyst Austin Smith discuss topics across the investing world.
In today's edition, Brendan and Austin talk about a huge dividend that Brendan rates as a sell. R.R. Donnelley sports a massive dividend yield of nearly 10%, but unfortunately also sports a massive debt load that has grown each year for the past four fiscal years. The company has pursued an acquisition-heavy strategy that is partially responsible for increasing total debt to the $3.75 billion level it's at now. Brendan also worries that the dividend level is unsustainable, considering the company's 124% payout ratio and negative first-quarter cash flow position. Finally, R.R. Donnelley is operating in a declining printing industry that's increasingly moving digital. Check out the video below for more on R.R. Donnelley's future prospects.
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Austin Smith has no positions in the stocks mentioned above. Brendan Byrnes owns shares of Apple. The Motley Fool owns shares of Apple and Google. Motley Fool newsletter services recommend Apple and Google. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.