Corporate executives have an ability to send ‘signals’ to the market about the health of their organization. One such signal is dividend policy.
In particular, if a company increases its dividend – particularly in a bad economic environment – it signals management’s confidence in the company’s future prospects. It also indicates the company has the cash to continue paying its dividend.
If I’m going to invest in a company right now, I want to know that the company’s executives are confident. While I wouldn’t rely on this single factor to make an investing decision, I believe it provides good corroborating evidence for an investing thesis that might already exist.
April of 2020 was one of the worst months ever for the US economy. Yet there are a handful of large cap US companies that are increasing their dividends, which I have listed below:
(Best viewed on desktop)
|April 2020 Dividend Increase Announcements|
|American Water Works||$0.50||$0.55||1.80%|
|Cheniere Energy Partners||$0.63||$0.64||7.60%|
|First Republic Bank||$0.19||$0.20||0.86%|
|Procter & Gamble||$0.75||$0.79||2.61%|
|Johnson & Johnson||$0.95||$1.01||2.89%|