Over longer time periods, dividend stock prices tend to follow their dividends—for better or for worse.
Sometimes, the stock price gets there first. This can be a race to the sky, in the case of a rising dividend. Or a race to the basement, when a payout is about to be cut.
For example, we had been concerned about Kraft Heinz’s (KHC) dividend for years. Income investors “sniffed out” the inevitable payout cut before the lower quarterly dish became official:
Kraft’s Stock Price Tipped Off Its Dividend Cut
Investors waste no time ditching a troubled dividend when a firm has hacked its payout in the past.… Read more