This Dividend Growth Stock Seemed Stable, But Just Suspended Its Payouts
It can be tempting to think that because a company has a strong track record of paying and increasing dividends the trend will continue. But this can be a dangerous assumption to make, especially when a company's fundamentals don't appear to support the dividend anymore. A great example of that is what happened with Healthcare Services Group (NASDAQ: HCSG) in February.
Healthcare Services' business centers around housekeeping and dining services it offers to healthcare facilities. It's not a terribly exciting business to invest in, but it has been a stable enough one for the company to be able to afford to pay a high dividend, and continuously increase it for years. Unlike many dividend growth stocks that raise their payouts every year, Healthcare Services had a streak that saw it raise its payouts even more frequently -- every quarter. In October 2022, the company announced a 77th consecutive increase in its payouts.
When I wrote about the stock last year, its streak was at 75, and even then there were signs that the company's financials simply weren't strong enough to continue that payout and keep the streak going for much longer.
Source Fool.com
