Because of this mindset, the implementation of a dividend or an increase of the dividendwas usually interpreted by the market as a positive signal of the firm’s abilityto earn enough to continue paying the dividend far into the future. Conversely, anydecrease in the dividend was normally viewed by the market as a very negative signal.Therefore, the stock price tended to change according to the dividend newsreleased by the firm, which would be favorable for AutoZone shareholders so long asmanagement was able to continue or increase the dividend each year.
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