{"id":90621,"date":"2021-06-07T09:45:00","date_gmt":"2021-06-07T13:45:00","guid":{"rendered":"https:\/\/ibkrcampus.com\/?p=90621"},"modified":"2022-11-21T09:47:35","modified_gmt":"2022-11-21T14:47:35","slug":"firms-around-the-world-are-increasing-their-dividends-at-a-very-fast-clip","status":"publish","type":"post","link":"https:\/\/www.interactivebrokers.com\/campus\/traders-insight\/securities\/stocks\/firms-around-the-world-are-increasing-their-dividends-at-a-very-fast-clip\/","title":{"rendered":"Firms Around the World Are Increasing Their Dividends at a Very Fast Clip"},"content":{"rendered":"\n

Executive Summary<\/strong><\/h2>\n\n\n\n

The Q1 and Q2 2021 earnings seasons were perhaps the best in history relative to expectations. FactSet notes that for Q2, 86% of S&P 500 companies beat on the bottom line, and maybe more impressively, 76% of firms reported a positive revenue surprise.\u00b9 <\/p>\n\n\n\n

This week, we feature insights on what companies are doing with their cash flow in light of the much better than expected operating conditions. We also investigate one small U.S. firm as an Earnings Outlier that traders should keep on their radar.<\/p>\n\n\n\n

Wall Street Horizon reports dividend data such as announcements, payable dates, record dates, and ex dates. In addition to tracking each company\u2019s dividend-related events, we spotted an interesting theme indicative of this year\u2019s improving market environment.<\/p>\n\n\n\n

Firms around the world are increasing their dividends at a very fast clip, particularly compared to firms slashing dividends. Among the 9,000 companies Wall Street Horizon covers across the globe, 2021-to-date has seen 2,000 firms raise dividends while just 628 have decreased dividends.<\/strong><\/p>\n\n\n\n

Last week<\/a>, we analyzed how companies were using cash, and this week\u2019s latest data shows that indeed firms are putting cash to work for the benefit of shareholders. In contrast, the first two quarters of 2020 netted just 577 firms increasing dividends\u2014so far this year that figure is a whopping 1,369.

What\u2019s more, many European nations and particularly emerging economies are still finding their footing as restrictions are slowly lifted in areas still grappling with the virus. Investors should expect many international stocks to continue shareholder accretive activities while the pace of dividend hikes might slow in North America. Portfolio Managers must be in the know concerning market-moving corporate events such as dividend hikes.<\/p>\n\n\n\n

Figure 1: Firms Increasing and Decreasing Dividends<\/strong><\/h2>\n\n\n\n
\"Firms<\/figure>\n\n\n\n

The latest list of firms resuming or suspending dividends is green across the board. Five U.S. companies recently announced a resumption to their respective dividends:<\/p>\n\n\n\n

  1. Golden Ocean Group Ltd (GOGL)<\/li>
  2. Cracker Barrel Old Country Stores Inc (CBRL)<\/li>
  3. L Brands, Inc. (LB)<\/li>
  4. The Cato Corporation (CATO)<\/li>
  5. Ralph Lauren Corp (RL)<\/li><\/ol>\n\n\n\n

    From an economic perspective, it is encouraging to see that four of these names are Consumer Discretionary <\/strong>stocks and GOGL is an economically cyclical Industrial<\/strong> dry bulk shipping firm. While companies voice struggles with inflation and tight global supply chains, data shows there is ample cash flow to increase and resume dividends in today\u2019s economy.<\/p>\n\n\n\n

    Earnings Date Outlier<\/strong><\/h2>\n\n\n\n

    Shifting gears to earnings, we feature one software microcap as an earnings outlier this week. <\/p>\n\n\n\n

    American Software Inc. (AMSWA)<\/strong> is an Atlanta-based supply chain management and enterprise software solutions firm in the Information Technology<\/strong> sector. Shares of AMSWA have been under pressure over the last three months as investors shift away from growth stocks toward value. Many names within the IT sector have underperformed year-to-date while cyclical sectors such as Energy and Industrials<\/strong> have gained ground versus the S&P 500. Just last week, AMSWA presented at the William Blair 41st Annual Growth Stock Conference.\u00b2 Wall Street Horizon tracks many important corporate events, among them are conferences. Next week, we will report on the key investor conference slated for Q3.<\/p>\n\n\n\n

    Supply Chain Woes<\/strong><\/h2>\n\n\n\n

    Amid bearish macro and sector tones, there is an opportunity for American Software. Investors around the world have been bombarded with pessimistic headlines regarding disruptions in supply chains as economies bounce back faster than goods can be produced and delivered. American Software\u2019s focus on AI-powered capabilities for supply chain management might be just the right niche for today\u2019s complicated economy experiencing surging consumer demand. Investors should pay attention to the tone of management at upcoming conferences and on Tuesday\u2019s Q4 and Fiscal Year 2021 preliminary financial results webcast.<\/strong><\/p>\n\n\n\n

    Outlier Analysis<\/strong><\/h2>\n\n\n\n