Is a Dividend Increase Necessarily a Buy Signal?

With so many companies raising their dividends this year, or in the case of a few, announcing first-time payouts, clients and subscribers have been wondering if these events are buy signals. For better or worse, the answer isn't a clear-cut "yes" or "no." That is especially true when it comes to companies that are announcing first-time dividends. Two fairly recent examples come to mind. In late 2009, oil services giant National Oilwell Varco (NYSE: NOV) announced its first quarterly dividend, 10 cents a share, to go along with a $1 special dividend. That gives the stock a yield of just 1%. But a year ago, NOV had $3.2 billion in free cash, so neither the quarterly nor the special dividend were too taxing for the company. Still, the performance of the stock following the dividend announcement hasn't been jaw-dropping.Click to enlarge:... Read more