I’m a novice in finance, an an engineer by profession, I only started investing in stocks less that 3 weeks ago. My interest is dividend investment so I’m building a portfolio that purely focus on dividend paying stocks. I began to think about airlines in particular and realised that most of these will surely need some kind of government bailouts of some sort. Surely if government bails a company out, will that automatically mean the company won’t be allowed to pay dividends for some time. It seemed illogical to me that a company that escapes collapse on account of public funds would keep rewarding shareholders in dividends.
I kept researching and found this article written yesterday in Seeking Alpha in relation to Boeing:
(((((On Saturday, the CEOs of 10 US airlines and the head of Airlines for America, the industry’s trade group, [signed a letter to congressional leaders]. In it, they agreed to “eliminating stock buy backs over the life of the loans” and “eliminating stock dividends for the life of the loans” if the industry receives at least $29 billion in loans or loan guarantees.)))))
Is this what generally happens when companies are bailed out and should this be taken as a serious concern for dividend investment.