A long history of consistent dividends to shareholders is tangible proof that the company has more good years ahead.Paying consistent dividends to shareholders demonstrates a high degree of assurance and company stability because cash is real. Dividends derived from company's earnings are recorded as paid. Annual reports and company's financial health can be manipulated but not dividend payments!
Predictable dividend records motivate shareholders to look forward to the next payment, usually every three, six or twelve months. This simply translates to a stronger base of supporters. E.g. ceteris paribus, Exxon Mobil Corporation (NYSE:XOM) share price rose steadily because dividends are paid consistently since 7th May 1987.
Most Non-Dividend-Paying Stocks (except Google Inc, Berkshire Hathaway Inc, etc) that hoard cash to conduct acquisitions and/or buy back stock and/or reward its Board of Directors, have historically performed poorer. Why? Impatient shareholders will sell their positions due to little or no stock appreciation. Unhappy shareholders will sell their positions due to unthoughtful management of company profits.
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