For many dividend investors, the demise of Carillion was a disaster.
Not only did their portfolios lose an important source of income, they also saw a permanent loss of capital.
As usual, it’s easy to see what went wrong with hindsight, and in the August 2017 issue of Master Investor magazine, I wrote about some of the key lessons from Carillion’s collapse.
But in this case, hindsight was not necessary, and the problems with Carillion were easy to spot even several years before its eventual demise.
Of course, simply saying Carillion’s problems were easy to spot is of no use to anybody, so rather than do yet another Carillion post-mortem, I thought I would apply a little foresight and look for companies with similar “red flags” which investors might want to avoid or get out of.