If there’s one thing dividend investors love, it’s consistency. The entire dividend ecosystem in America is based on predictable and stable payouts from stocks. As such, we reward firms that have paid dividends over decades and, in turn, punish those that cut or suspend their dividends. This is why the recent trend in variable dividends is throwing many investors for a loop.
What started off in the natural resources industry a few years ago has now expanded into other sectors and industries. And several analysts predict that such variable dividends could eventually become the new norm for many other corners of the market.
For investors, the trend toward variable dividend payouts requires innovative thinking when it comes to portfolio construction.
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