The Framer Corporation has been doing poorly for several years. Over the last three years EPS fell from $3.00 to $2.00 and then to $1.50. Dividends, however, were held at $1.50 for the first two of those years, and then jumped to $1.80 last year, $.30 higher than earnings. What is likely to be behind this strange pattern? Would you invest in the company's stock?

Holding the dividend up despite falling earnings was likely to be an attempt to signal investors that the firm's problems were temporary, and that management believed better times were ahead. Increasing the dividend last year was likely to be an attempt to send a stronger version of the same message. The signal, however, seems to be getting desperate, and probably implies the firm is in real trouble. Investing in the stock is probably not a good idea at this time.