Consumer electronics giant Best Buy
Income investing fell out of vogue in the 1990s. After all, any company with no better use for its cash than to pay it out to investors -- especially with the economy so strong and so many new business avenues seemingly available -- must have been short on ideas.
In fact, some business are, and should be, perfectly fine with doing just that. Companies in steady-growth industries with strong free cash flow that pay regular dividends -- Tootsie Roll
In the end, the reasons companies do or don't offer dividends are as varied as the companies themselves. You can bet software giant Microsoft
In Best Buy's case, however, this looks like good news. Especially, since the company also discussed plans to continue growing and to continue eking out better performance. It also plans to begin buying back shares, which will boost per-share earnings (mathematically, at least).
One might interpret the move as a sign that growth is slowing -- over time, with large companies that don't make major acquisitions, it almost always does. But Best Buy is performing well, improving margins, and successfully ditched its struggling Musicland division. By paying a dividend, management appears focused on delivering for customers and investors.
Dave Marino-Nachison can be reached at firstname.lastname@example.org.