Dividend Increases have signaling power

Dividend increases offer strong signaling power, more often than not.

A company that slows down on dividend growth is telling me about clouds on the horizon.

A company that picks up on dividend growth is signaling confidence in their business prospects.

A company that keeps on delivering at a steady clip is somethign to admire too, as it doesn’t happen that often.

Sometimes a company may raise dividends by too much, too fast too however. Sometimes a good looking thing may be a sign of desperation. Hence, why I view dividend signaling as a signal with positive correlation, sometimes the inverse can be true too. Examples include the old CenturyLink (which ultimately ended up cutting dividends).

I guess I have looked at a lot of dividend increases over the decades, so perhaps things start jumping at me...

Dividend signaling works best when looked together with trends in earnings per share, dividends, payout ratios.

If a dividend increase stands out, and surprises me, it’s always a good learning opportunity for further research.

While dividend signaling is not going to be right 100% of the time, all the time, it has been right more often than not.

I take recent dividend increases in consideration when I decide whether I should invest in a security. This is a step during my review process.

How do I monitor dividend increases?