The markets remained nervous last week as several companies such as State Street, Macy’s and Motorola cut or eliminated their dividend payments. Of those three, seasoned dividend investors should only be concerned with State Street’s dividend cut. During economic downturns it is normal for cyclical industries to cut or eliminate their dividends. Companies with strong competitive advantages, as well as solid consumer brands should keep and even increase their dividends. The companies whose dividend cuts are concerning are the ones which have raised them for more than 10 or 25 years, which represent the so called dividend achievers and dividend aristocrats. This week brought two raises by dividend aristocrats as well as three notable raises from dividend achievers.
General Electric kept reassuring investors that it had sufficient cash flows to pay its dividend and that its AAA rating won’t be lost anytime soon. Over the past few months, anytime GE reassures investors about the stability of its current dividend payment, the news hits the wires and the trading in the common shares gets pretty volatile. The diversified global infrastructure, finance and media company has taken steps to strengthen its cash flow situation by raising almost two thirds of its required long-term funding for 2009, and reducing GE Capital Services commercial paper by 28 billion to 60 billion today.
Avon Products (AVP), which engages in the manufacture and marketing of beauty and related products worldwide, announced that its Board has approved a 5% increase in its quarterly dividend from $0.20 to $0.21 per common share. Avon Products is a dividend achiever, which has consistently increased its dividends for twenty consecutive years. The stock currently yields 3.70%.
Ross Stores (ROST), which operates two chains of off-price retail apparel and home accessories stores in the United States, announced that its Board has approved a 16% increase in its quarterly dividend to $0.11 per common share. Ross Stores is a dividend achiever, which has consistently increased its dividends for over fifteen consecutive years. Since 1994 this retailer has managed to double its dividend payments every three and a half years on average. The stock currently yields 1.40%.
Pitney Bowes (PBI) which provides mail processing equipment and integrated mail solutions in the United States and internationally, announced that its Board has approved a 4% increase in its annual dividend from $1.40 to $1.44 per common share. Pitney Bowes is a dividend aristocrat, which has consistently increased its dividends for twenty-seven consecutive years. The stock currently yields 6.00%.
Archer Daniels Midland (ADM), which procures, transports, stores, processes, and merchandises agricultural commodities and products, announced that its Board has approved a one cent boost in its quarterly dividend to $0.14 per share. Archer Daniels Midland is a dividend aristocrat, which has consistently increased its dividends for thirty-four consecutive years. The stock currently yields 2.00%. Check out my analysis of ADM here.
HCP (HCP), a real estate investment trust that invests in health care-related properties and provides mortgage financing on health care facilities, announced that its Board has approved an increase in its quarterly dividend from $0.455 to $0.46 per share. HCP is a dividend achiever, which has consistently increased its dividends for over twenty consecutive years. The stock currently yields 7.40%.
J.B. Hunt Transport Services, (JBHT) announced that its Board has approved a 10% increase in its quarterly dividend from $0.10 to $0.11 per share. J.B. Hunt Transport Services has consistently increased its dividends since 2004. The stock currently yields 1.70%.
L-3 Communications (LLL) announced that its Board has approved a 17% increase in its quarterly dividend from $0.30 to $0.35 per common share. L-3 Communications has consistently increased its dividends since 2004. The stock currently yields 2.70%. L3 Communications provides command, control, communications, intelligence, surveillance, and reconnaissance (C3ISR) systems; and aircraft modernization and maintenance, and government services primarily in the United States.
Full Disclosure: Long ADM and GE
- Archer Daniels Midland (ADM) Dividend Stock Analysis
- Dividend Aristocrats List for 2009
- My take on State Street’s dividend cut
- Bad Start of the Week for Retail Investors
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