Do companies increase their dividends the lower the stock price goes?

CreditCardChris

I've kinda noticed a trend, the lower a stock price goes the higher the dividend payout tends to be? Why is this the case? 
For example Shells dividend is a whopping 13.85% and I think it's because the share price is getting smashed. If you look at the dividend history in 2018 - 2019 when the share price was near all time highs the dividend yield was 7% and 7.2% respectively. 

Same for BP, HSBC, Imperial Brands etc the list goes on. Of course not every company does this but many do and I wonder if it's just a tactic to "reward" investors for holding a stock which is losing 70%+ of its value so they bump of the dividend payouts to offset the raw share price loss? 

Essentially it seems like a surging stock = low dividends whereas a crashing stock = high dividends. 

EdGasketTheSecond

A lot of companies are cancelling dividends altogether right now due to uncertainty. All you are looking at is a mathematical formula of past dividend/ share price. Of course then if the share price is lower AND you buy at the lower price, you will get the stated yield but only if the company can continue to pay it.

p00hsticks

Companies announce dividends in forms of x pence/cents/whatever currency per share - not as a percentage of their share price. So if the share price sees a drastic fall between announcing the dividend and paying it the percentage will rise, but it;s not deliberate.

So for example, Royal Dutch Shell B Euro shares have consistently paid a dividend of 0.47 Euros each quarter for the last five years. But what that represents as a percentage will vary with the fluctuating share price. 

https://www.hl.co.uk/shares/shares-search-results/r/royal-dutch-shell-plc-b-shares-eur0.07/dividends

inflationbuster

Basically if the yield increases the dividend (if paid) buys more shares in the company assuming you re-invest the dividend.  So future dividends payment you receive will naturally increase as well. 

Prism

CreditCardChris said:

I've kinda noticed a trend, the lower a stock price goes the higher the dividend payout tends to be? Why is this the case? 

Its not the case. The dividend is relatively fixed and the stock price has no bearing on it. The company can put the dividend up or down as it sees fit

takesyourchances

It will be interesting how many investment trusts will be with dividends following all of this, City of London, Bankers, Scottish American to name a few etc all long records of raising dividends for many decades.

Likes of Murray International and so on, the list is endless really......Then there will be some of the newer trusts etc.I will find out myself in time too as I hold many trusts.

george4064

What you’re looking at is the dividend yield, which is a simple formula of dividend per share/share price. What is happening here is that the dividend is fixed whilst the share price is falling, hence the dividend yield is rising.

I can categorically say that the dividend per share is not rising!

Also with noting that investment trusts can hold cash in reserve to smoothen out dividends whilst funds are not allowed to do that, hence we will see more fluctuation in fund dividends than investment trust dividends.

Thrugelmir

Dividend yield is a historic figure based on previous payouts. 
Some of the UK companies to cancel declared dividends so far are:-
McCarthy & Stone
Joules
William Hill
Shepard Neame
Marstons
Gym Group
Crest Nicolson
Marks & Spencer
Weatherspoons
InterContinetal Hotels
Travis Perkins
Johnson Service Group
Playtech
Elementis

Going to hit investors returns on shares. 

Thrugelmir

george4064 said:

Also with noting that investment trusts can hold cash in reserve to smoothen out dividends whilst funds are not allowed to do that, hence we will see more fluctuation in fund dividends than investment trust dividends.

Reserves are factored into NAV. Cash paid out is going to reduce the value of the underlying investment held. There's no free lunch to be had. 

Username999

Thrugelmir said:

Dividend yield is a historic figure based on previous payouts. 
Some of the UK companies to cancel declared dividends so far are:-
McCarthy & Stone
Joules
William Hill
Shepard Neame
Marstons
Gym Group
Crest Nicolson
Marks & Spencer
Weatherspoons
InterContinetal Hotels
Travis Perkins
Johnson Service Group
Playtech
Elementis

Going to hit investors returns on shares. 

How did you get that list?
Are you maintaining it from https://www.dividenddata.co.uk/
Cheers

Thrugelmir

Username999 said:

Thrugelmir said:

Dividend yield is a historic figure based on previous payouts. 
Some of the UK companies to cancel declared dividends so far are:-
McCarthy & Stone
Joules
William Hill
Shepard Neame
Marstons
Gym Group
Crest Nicolson
Marks & Spencer
Weatherspoons
InterContinetal Hotels
Travis Perkins
Johnson Service Group
Playtech
Elementis

Going to hit investors returns on shares. 

How did you get that list?
Are you maintaining it from https://www.dividenddata.co.uk/
Cheers

Been monitoring the news for such events. As hold a number of individual UK company shares.