Dividend stocks are back baby!  Now that earning releases are coming into full swing and businesses had time to reach and adjust due to COVID-19, results are much better than expected.  In fact, some companies are making even more money now than. before the pandemic.
 

As a dividend investor, I witnessed many dividend stocks cut their dividend.  I am not talking just dividend cuts, but also dividend removals.  We are now a surprising 8 months of battling COVID-19.  There are signs that dividend stocks are back, as dividend increases have resumed.

Dividend cuts

Remember my article, Pandemic Dividend Cuts Sting Deep? I lost over $814+ in forward dividend income due to dividend cuts.  As an investor or someone who wants to use dividend income as their primary source of passive income, this hurt.  Financial freedom took a few steps back during the early part of 2020.

Why did the cuts happen?  Companies wanted to preserve capital, reduce outflow of cash and stay as liquid as possible.  The first few months of COVID-19 brought much uncertainty and companies had to react accordingly.

Therefore, in an effort to survive the global pandemic, companies either reduced or completely cut their dividend.  However, as we have started to see, survival did occur for many companies, as dividends are coming back for many!a

In that sense, I believe dividend stocks are BACK and the dividend income is ready to grow again!  Dividend growth is extremely important on the journey to financial freedom and investors should feel more confident moving forward.

Dividend Increases after Dividend Cuts

Listed below are dividend stocks that have increased their dividend, subsequent to COVID-19 dividend cuts.  I’ll go over a few headliner companies and show you what they did during the early stages of COVID-19 and what they have done to their dividend since then.

Wendys (WEN): First, they reduced or cut their dividend from $0.12 per quarter, down to $0.05 per quarter.  This was a significant 58% wallop to their dividend!  Income investors definitely felt the pinch, but those Wendy’s longs have never looked longer.  Business is doing very well, as Wendy’s was now able to INCREASE their dividend from $0.05 per quarter to $0.07, a 40% jump.  Don’t let the number or the percentage increase fool you, as a 40% increase is only $0.02 and the dividend is STILL lower by $0.05 or 42%.  However, nice to see the dividend coming back!
 

Shell (RDS-A RDS-B): Shell is trying to be the oil engine, “that could”.  Now, they set a historic moment earlier in the year due to COVID-19, as the oil industry was shaking, essentially breaking.  The price per barrel was practically worthless in the futures market, due to a supply and storage problem.  This pushed Shell for the first time in almost a century, to cut their dividend down to $0.16 (i.e. $0.32 for the ADR), a massive 66% dividend cut!
 

Now, Shell beat earnings and forecast estimates.  Due to other oil giants of Exxon Mobil (XOM) and Chevron (CVX) maintaining their dividend, I wonder if Shell investors were putting the pressure on.  Therefore, Shell increased their dividend from $0.16 (i.e. $0.32) to $1.665 (i.e. $0.3333), a 4% dividend increase.  Now that isn’t a significant increase, BUT it shows signs of confidence that their cash flow, balance sheet and process has improved!
 

Dividend reinstatements from abolishing the dividend

Foot Locker (FL): Footlocker completely stopped one quarter dividend payment.  After announcing incredible results and growth, we are talking a 17% sales growth year-over-year, plus having insane liquidity over their debt levels, Footlocker (FL) resumed their dividend of $0.15 per share, per quarter.
 

Did consumers change their purchasing appetite to shoes/clothing vs. going out, traveling, etc..?  That appears to be the case, and I did read a few publications on the subject.

Darden Restaurants (DRI): Another dividend stock that was marching in dividend increases, year after year, had to stop their dividend as well.  9 months later, Darden came back with a dividend.  However, there is always an asterisk.  Their dividend pre-COVID-19 was $0.88 per share, per quarter.  Darden came back with a dividend, but only at $0.30 per share, per quarter.  Therefore, they are still 3x as far away from that dividend, at the moment.  Winter is coming and I wonder how business will perform when outdoor seating will be limited to the geography hit hard by winters.  Time will tell on this company.

Marathon Oil (MRO): Marathon, like other energy players, completely turned off the dividend machine after Q1.  In fact, they waited 2 quarters, but have resumed and reinstated their dividend policy.  However, and here is the caveat, Marathon’s previous dividend was $0.05 per share, per quarter and the dividend that was reinstated stands at $0.03 per share, per quarter.

Now, these are only thee dividend stocks to resume their dividend payment.  There are MANY more, but I wanted to highlight a few large one’s that many investors have in their portfolio.  The resumption of the dividend is a great sign that dividend stocks are back!  That’s a primary reason why investors hold the stock, the feeling of ease finally is starting to come back.

Dividend stocks to watch for resuming or increasing their dividend

Disney (DIS): Disney, the magical and wonderful place to be, halted their dividend payouts in 2020.  In fact, we argue that the best move Disney has ever made was the launch of the Disney+ platform, it could not have been better timed with COVID-19.  Why?  Sports stopped.  Movie theaters and blockbuster movies stopped.  Theme parks were closed.  The Disney+ platform and their television entertainment arm kept their company afloat during COVID-19.