Increased common stock cash dividend signal to stock holder, Financial Management

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Do you believe an increased common stock cash dividend can send a signal to the common stockholders? If so, what signal might it send?

An enhance in cash dividends is often seen as a positive signal. A company would be unlikely to enhance its dividend if it did not believe its future prospects were good sufficient to sustain the higher level of dividends. This is for the reason that the market usually frowns upon a cut in dividends.

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