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The Fed has even allowed most banks to raise their dividend payments to investors and/or buy back shares – both moves that make them more appealing investments.
It used to be that companies would simply raise their dividend if they were sitting on too much cash.
First, this is a textbook example of the benefit of buying high-quality undervalued stocks that consistently raise their dividend.
When you think of how management can allocate cash flow, which is the lifeblood of any business, they can purchase another company or invest in a new venture or buy back debt or buy back shares or raise their dividend.
Unlike common stocks that may raise their dividend on a regular basis, income funds rarely raise their dividends and historically are more likely to cut their dividends than to raise them.
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Financial companies pushed stock indexes higher Tuesday on signs that banks might soon raise their dividends.
That led analysts to note that large consumer banks might raise their dividends.
While firms like JPMorgan Chase can raise their dividends and buy back shares, others including Citigroup and Ally Financial remain on shaky ground.
"There was press speculation over the weekend that banks reporting this week may raise their dividends, and possibly sovereign investment funds will increase their investments".
DIVIDENDS may be out of fashion, but companies that consistently raise their dividends often make excellent long-term investments, money managers and securities analysts say.
"When you think about it," she said, "companies that have pricing power -- and are thus able to maintain their profit margins -- will be able to continue to raise their dividends".
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