Monday May 12, 2008
"Trying to out-guess the markets is little more than speculation," says Kelley Wright whose IQ Trends uses dividends as a guide to a stock's value. Here's some "dividend" boosters.
"In our view, the only thing the enlightened investor can depend on is the irrefutable fact of the cash dividend that is consistently paid by the highest quality companies.
"As we've long stated, a rising dividend trend offers uncontestable proof that a company is, in fact, making profitable progress. Much more so than earnings, dividend yield trends can show whether a stock’s price is likely to appreciate.
"When a dividend is increased the price of a stock, at some point, must rise to reflect the increased value of the investment. There is no more accurate indication of fiscal achievement in a publicly traded company than a trend of rising dividends.
"Dividends are real money, a spendable return on one’s investment. Dividends are the surest confirmation of a company’s profitability since dividends can only arise from the reality of earnings.
"Enlightened investors have grasped the point that it is usually one condition – higher earnings or management’s reasoned expectation of higher earnings – that prompts a dividend increase.
"In this light, we would point out that Associated Banc-Corp. (NASDAQ: ASBC), BancorpSouth Inc. (NYSE: BXS), IBM (NYSE: IBM), Johnson & Johnson (NYSE: JNJ), Marshall & Ilsley Corp. (NYSE: MI), Northrop Grumman (NYSE: NOC), Southern Company (NYSE: SO) and Westamerica Bancorp (NASDAQ: WABC) have all announced dividend increases.
"So we go forward with what we know: there is no profitable substitute for quality; value is established by the return; and, dividends don’t lie."
