From Cynthia Scott of OMC Financial Services:
Should you add stocks that reduced or eliminated their dividend because of the financial debacle in 2008?
>>When companies cut dividends it is a signal that they are usually in financial difficulty
>>804 companies cut their dividends in 2009; companies paid almost $52 billion less in dividends in 2009
>>If a company hasn’t cut or reduced its dividend by now, it probably won’t do so
>>135 companies have either increased, reinstated or initiated dividends in 2010
>>Companies such as Caterpillar, which did not cut its dividend, raised it in June sighting improving economic conditions.
>>Stock prices that are depressed because companies cut or reduced their dividends will see their stock prices rise when they increase or reinstate the dividend
>>GE is an example since it just announced a 20% increase in its dividend, the stock rose in price as a result. The stock had cut its dividend from 31 cents to 10 cents per share in 2009.
>>Companies are in much better financial shape and buying these stocks now will offer the investor the potential for both dividend income and price appreciation.
