Value Investing News

The financial crisis of 2007-2009 led to dividend cuts in many financial companies. Investors who were heavily concentrated in the financial sector suffered in the process.

Sometimes when companies are tight on cash, they will declare and pay a stock dividend in lieu of a cash dividend. Most shareholders feel like they are getting something. But are they really? In short, a stock dividend is nothing more than a glorified stock split.

Several large companies announced dividend increases over the past week. One of the most notable bullish calls came from the telecom sectors as AT&T (T) showed confidence in its business model by increasing its dividend payment to shareholders for the twenty fifth consecutive years. Despite the tough macroeconomic conditions AT&T (T) is still committed to raising its quarterly dividend.

In Triumph of the Optimists: 101 Years of Global Investment Returns (2002), the authors determined that performance in any given year was driven by capital appreciation, but long-term returns were largely the result of reinvested dividends.