Dividend Insight
The stock market never seems to get the respect it deserves. It either gets too much credit or too little. As far as I can tell, this chronic problem stems not from the stocks themselves but from the way people choose to obtain their returns, and the way corporations have adapted to provide them.
Among other things, Wall Street is obsessed with quarterly corporate earnings reports. A company that announces earnings that exceed Wall Street expectations can see its stock price rise 5 or 10 percent in minutes. A firm that fails to measure up, sometimes by just a penny a share, can get clobbered by even larger proportions.
These earnings reports receive much more attention than dividend announcements, which are also made at roughly three-month intervals. Earnings releases are long and chock-full of interesting details and figures. Dividend announcements may contain no more than a paragraph focusing on just two pieces of information; how large the dividend is and when it will be paid. Dividend announcements also tend to be fairly routine; most of them contain nearly identical information quarter after quarter, year after year.
But even if earnings releases make much more interesting reading, dividends speak louder than earnings. A company's pattern of dividend payments can offer valuable clues to underlying corporate performance, clues just as valuable as those provided by earnings reports and other financial data, and definitely more useful than the conclusions someone might draw from looking at a three-month stock chart. Dividends are more than mere information; they provide insight that any investor can use to make successful investments.
