- Corporate earnings are projected to grow by nearly 25%, with free cash flow growing even faster.
- Loan loss reserves are peaking at many banks, and we are convinced that banks will begin hiking dividends as soon as the regulators allow it.
- Corporations don't need to hoard cash since the capital markets have returned to near normal functioning.
- Even among companies that don't want to commit to permanent dividend hikes, we believe many will choose to pay special one-time dividends as a reward to their shareholders.
- In our judgment, corporate America is growing very weary of the run and gun stock trading crowd. Companies are becoming more and more anxious to attract shareholders who are interested in the long-term success of the company. The quarter-to-quarter trading crowd can never be successfully sold on the idea of investing in companies as opposed to stocks.
We'll report periodically in future blogs on how dividend growth is faring.