For dividend investors, the recent news that Stanley Works
The venerable Stanley Works has been paying dividends annually since 1877. That's quite a track record, and it suggests that we can probably count on next year's dividend arriving. Yet not all dividend increases are alike. Stanley's latest is a 3.2% increase, from $0.31 per share to $0.32.
Other companies have recently announced much more tantalizing hikes. Schwab
Another consideration is the company's long-term dividend growth rate. A 28% hike seems great, but not if the company rarely increases its dividend after that, or only does so in 1% increments. UPS
More considerations
Then there's the payout ratio. According to David Templeton at seekingalpha.com, Stanley Works payout ratio is around 31%, down from 46%. This means that the company is keeping more of its income for other purposes, rather than paying it out to shareholders. Discriminating shareholders and potential investors might want to check where that money's going. A broader economic perspective might also help; the company is rather cyclical, and it isn’t likely to soar as long as our housing market and economy are in a slump.
What to do
When you approach dividends, do so with a level head. Look for sustainable payout ratios, sustainable competitive advantages, and consistent growth.
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