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Should Investors be Wary of the Companies Raising Dividends?
(Note: companies that
could be impacted by the content of this article are listed at the base of the
story [desktop version]. This article uses third-party references to provide a
bullish, bearish, and balanced point of view; sources are listed after the
Balanced section.)
Everyone loves a dividend increase. Right? After all, it puts more money into the hands of investors and who doesn’t like more money? But in doing so, management is foregoing using capital that could repurchase shares, pay down debt, or invest in future growth opportunities. Is raising a company’s dividend a sign of improved company health? Or is it a sign that management does not have better options?