1. Issuance of dividends usually means the company has significant positive cash flow.
2. The consideration of payout ratio and rate of dividend growth when viewed together are a good measurement of the company’s health.3. They motivate management to focus on generation and growth of both earnings and cash flow.
4. Income investors enjoy less volatility with little to no sacrifice of total return vs. non-dividend stocks. Dividend stocks tend to have lower betas.5. For now, there is a tax advantage for dividends over capital gains.
6. Investors can generate growing cash flow at a rate far exceeding inflation by careful selection of stocks with increasing dividends.
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