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Expected Dividend Increases In May (Hopefully)

May 04, 2020 4:45 AM ETPG, JNJ, IBM, SO, GWW, AAPL, KMI, MTB, TRV, CAT, CB, LEG, CAH, LOW, CLX11 Comments
Dividend Diplomats profile picture
Dividend Diplomats


  • Unfortunately, from a dividend perspective, the story in April was similar to the story in March.
  • Once again, dividend cuts stole the show.
  • The cuts have caused us to stop in our tracks and refocus our investing strategy.

April was an interesting month in the market. Trillions of dollars were pumped into the economy and the Fed was pulling all of the levers possible to offset the fact that economic activity came to a screeching halt. Stock prices rebounded from the crash in March and the market posted its best month in 30+ years (from a percentage gained perspective).

Unfortunately, from a dividend perspective, the story in April was similar to the story in March. Once again, dividend cuts stole the show. The end of the month, was particularly brutal, as Royal Dutch Shell (RDS.A) dropped a "66% dividend cut" bomb on their investors. The other major companies announced drastic reductions in CAPEX to hold on to maintain their dividend this quarter. So yes, it was very shocking when Shell announced their cut out of the blue and ahead of their peers.

Oil has not been the only sector slashing their dividend. Retail continues to see the dividend cuts fly in. Bed Bath & Beyond (BBBY), for example, cut their dividend amidst the store closures. It'll be interesting to see how quickly some of these retail companies restore their dividend once the economy returns to normal (whenever that may be).

The dividend cuts have been brutal. But is that going to stop us from investing? HECK NO! It caused the two of us to stop in our tracks and refocus our investing strategy to focus on companies that are:

  1. Dividend Aristocrats (or close to it) to focus on companies that have increased their dividend through various economic cycles
  2. In industries built to perform well during the pandemic
  3. Perform well in our Dividend Stock Screener

Further, for me personally, I'm also paying closer attention to the balance sheet than ever. I'm going to continue considering a company's debt position in future

This article was written by

Dividend Diplomats profile picture
Two guys who love Investing, Dividends, Frugality, Passive Income & attempting to Reinvest Our Dividends to one day achieve Financial Freedom! Follow us on your journey towards a work-free life! We share EVERY ASPECT of our journey on our blog, social media, and YouTube Channel. Make sure to follow us so you don't miss an update. Updates include the stocks we are watching, buying, selling, and our overall thoughts about the the marketBlog: http://www.dividenddiplomats.comYouTube Channel: www.youtube.com/dividenddiplomatsTwitter: https://twitter.com/DvdndDiplomats

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Comments (11)

By 12/31/2020 all dividends of major dividend paying corporations will have been cut or suspended.
Dividend Diplomats profile picture
Why do you say that?
You might want take a look at RPM. A company that has increased the dividend for decades. 42 years to be exact The company has been run by the Sullivan family since its founding in the 1940s you’ll recognize them by one of their popular products Rustoleum
Dividend Diplomats profile picture
Great company, but they won't announce an increase until October!
vooch profile picture
Any Dividend Investor needs to rethink their risk after the Shell dividend slash. Illuminating they didn't offer a scrip. I think, last time Shell slashed its dividend was May 1940.

Its very much a risk on environment. Like perhaps the most risky since the Panic of 1907.
Dividend Diplomats profile picture
Agree - And we have adjusted as well to focus on company's with better balance sheets and companies that will perform better during the current enviornment
j. hughes profile picture
Beware of companies like Coke who are using borrowed money to pay part of their dividend.
Dividend Diplomats profile picture
Debt is definitely something to be more focused on while making an investment decision going forward.
It feels like IBM is gaming it just to say they increased the dividend.
Probably so draiochtanois, but they're already paying more than 5%, let's not be too greedy. I see them as a great company that is being prudent with their cash. In today's times, that is much more important to me than a dividend % increase.
Dividend Diplomats profile picture
An increase is an increase. I'll take being "gamed" with a $.01 per share increase versus not receiving an increase at all.
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