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Listen To Company Insiders: May Dividend Raises

Published Mon, 08 Jun 2020 12:49:44 -0400 on Seeking Alpha

Dividend policy is a legal way executives with inside information can signal a company's long term prospects to the investing public.
While dividend policy alone isn't an investing thesis, I believe the signal these dividends send - especially in today's environment - adds a layer of support for an investing thesis.
I identify five companies that meaningfully increased dividend this past May.
I have many cynical friends that argue the only way to beat the market is with non-public inside information. Let's be clear: Trading based on material non-public inside information is illegal. Don't do it.
There are, however, indirect signals sent to the market by those with inside information. One of those signals is dividend policy.
Essentially, an executive team should have the best knowledge of their company's opportunities and prospects. They have access to material non-public information because they know the future product pipeline, internal investments, organizational changes, potential M&A activity, etc. One might also argue they have a better understanding of their business - even including public information - than anyone else.
Of course, there are many lackluster executive teams. This is why you diversify. Still, I think dividend raises made by corporate executives send a big signal to the market: Those who understand the business best believe in that company's ability to pay future dividends.
It's one thing for a CEO to say he stands by their company dividend. It's another to say it won't be cut. But where the rubber really hits the road is when a CEO commits a portion of a company's future cash flows to paying a higher dividend. You know what they say: Money talks, and you know what walks.
Well, the dividend increases during the month of May - a time of huge economic uncertainty - is money talking very loudly. You should listen.
(Note: I also listed out April's dividend growers in another article.)
The State of... Read more

Stock name Last trade   P/E Earnings/Share Dividend/Share Dividend yield
PEMBINA PIPELINE 36.91   16.1 2.29 1.80 4.86
CARDINAL HEALTH 48.48   10.8 4.51 1.92 4.01
PEPSICO 137.29   15.2 9.02 3.82 2.81
AMERIPRISE FINANCIAL 146.38   10.8 13.58 3.88 2.68
CLOROX 160.20   25.3 6.34 4.24 2.68
THOMSON REUTERS 67.42   9.4 7.19 1.44 2.12
MEDTRONIC 110.38   33.8 3.27 2.16 2.01
TYCO ELECTRONICS 97.00   10.7 9.07 1.84 1.92
CHUBB 160.10   19.6 8.15 3.00 1.88
KKR & CO LP 28.05   10.7 2.63 0.50 1.86
KONINKLIJKE PHILIPS ELECTRONICS 47.57   28.3 1.68 0.82 1.76
AMERICAN TOWER 218.85   66.3 3.30 3.68 1.70
MICROCHIP TECH 95.47   64.5 1.48 1.46 1.58
NORTHROP GRUMMAN 365.22   19.5 18.72 5.28 1.49
EXPEDITORS INT 75.21   20.8 3.62 1.00 1.32
FACTSET RESEARCH SYSTEMS 276.65   32.6 8.50 2.88 1.07
FRANCO-NEVADA 91.87   114.8 0.80 1.00 1.06
BAXTER INTERNATIONAL 87.82   29.6 2.97 0.88 1.02


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