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Robert Burgess

Those Vanishing Stock Dividends Should Stay That Way

Companies can put the cash that was dedicated to shareholder payouts to better use.

Vanishing act.

Vanishing act.

Photographer: Edward G. Malindine/Hulton Archive/Getty Images

When Freeport-McMoRan Inc. announced on March 23 that it was eliminating its quarterly dividend because of the uncertainty brought on by the emerging Covid-19 pandemic, the company’s shares took a hit, closing within pennies of their lowest in more than four years. So when Chief Executive Officer Richard Adkerson said on Friday that the world’s largest publicly traded copper producer would be in a position “very early next year” to consider not only restoring the payout but “building it up to where it will be very meaningful for shareholders,” investors could have been expected to be elated.

Instead, they seemed disappointed, beating the shares down 0.35%. It’s not as if shareholders missed the dividend. Freeport-McMoRan’s shares soared 211% between the last trading day before suspending the payout and Friday, trouncing the 51% gain in the S&P 500 Index. Even the exalted tech-heavy NYSE FANG+ Index, which surged 111%, couldn’t keep pace with the company.