A big dividend raise isn't always the right move for a
business.
Everybody loves dividends. I mean, seriously, who doesn't
love a stock that pays you cash as a thank-you for investing? Additionally,
dividends are usually a solid indicator that a company is actually making money
-- after all the financial finagling, it still has the cash to schedule
payments to investors. Escalating dividends are often taken as a sign that
management is particularly bullish on the company's future -- so much so that
they're willing to hike how much they pay investors each quarter.
It's understandable, then, that the idea of a company
doubling its dividend is exciting. To get paid literally double what you were
previously being paid is great on its own, but it also means the company has
the wherewithal to sustain all that extra cash going out the door -- a sure
sign of its strength as a business.
But there's a big difference between "can" and
"should" -- and while these three companies can give income investors
a doubled dividend, here's why they shouldn't.
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