Here are the 3 signs that indicate a company is about to initiate a dividend:
1. Positive free cash flow. A company must be generating positive cash flow before it can begin paying a dividend.
2. Growing free cash flow. A company with rapidly growing cash flow can easily pay down debt, buy back stock, invest in growing its business and pay its shareholders.
3. Investor demand. If a company’s investors want a dividend, a company is more likely to pay one.
A dividend initiation is a one-time-only moment in a company’s lifespan and it can help investors profit handsomely. By recognizing the signals, you can get in before the announcement to capture the income and the gains.
Sven Franssen