“Investors Switch to Dividend Stocks,” is the message in today’s Wall Street Journal‘s front cover story. Elsewhere one could read that companies that show a disconnect between profits and cash flow — like Netflix — would struggle to find the cash to return to shareholders on a quarterly basis. Companies with persistent dividend growth have provided competitive returns during periods of market volatility, and the WSJ reported that investors are “rattled by the threat of trade restrictions and a slowing economy.” The Journal added, “The tech-heavy bets that delivered blockbuster returns in the last year’s market have faltered so far in 2025.”
Historically, dividend-paying companies have been low-growth businesses, but their ability to generate strong recurring free cash flow and commitment to paying out consistent dividends has allowed them to outperform the market.
This recent development raises questions about those media companies that rely heavily on their streaming services, which are notoriously losing substantial amounts of money. Will they be able to invest in high-cost original productions? Will the number of new original streaming series decline? The stock market will soon give some answers.
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