What's it mean when a company raises the dividend on its stock?

Question

That's a good sign right?

Answer 1

It's a clear sign that the corporate management sees clear skies on the horizon and is spreading the wealth. Yes a good sign.

Answer 2

Usually it is a good sign. It means the company has a good amount of cash on hand and it is paying it back to the stock holders. Usually a company will up its dividend if it has had several good quarters in a row and feels it can sustain the dividend at that level.
It is a bad sign if the company has too much debt and is paying out more for its divdend than cash it has coming in. In that case the company is probably just trying to keep up appearances and it is robbing peter to pay paul and the stock will probably drop significantly when they can't do that anymore.

Answer 3

Yes and no. There are several companies that have a history of raising their dividends. But sometimes there isn't enough profit, the management is just doing it to keep the stock value high (and his stock options valuable). If one company made $2 profit per share, but had $1 per share in dividend, this is one thing. But if a company had $1 per share dividend and made, say, $1.10 per share profit, or worse, a loss. That isn't good. Washington Mutual had a picture sort of like this last year.

Last year Exxon made a little shy of $40 billion in profit, and paid out some $9 billion in dividends (plus collected or paid out close to $100 billion in taxes and government fees and leases--a real cash cow for government). That is not good, it is great! See the difference?

Answer 4

it means the company is paying out more of its profits to the shareholders instead of growng the company...so yes you will make more in dividends, but the stock may not increase in value as much as it might if the money were invested in the company for growth

Answer 5

It means they have more cash than they have profitable opportunities to invest it in.