There were several dividend aristocrats that recently announced no increase in their payments to shareholders.
Pfizer (PFE), which is one of the leading pharmaceutical companies in the world, announced no increase in its annual dividends for the first time in 41 years. In the past decade, the company was used to increasing its dividend payments to shareholders every December. It comes as no surprise to me that PFE is not raising its dividends. The company needs to increase its drug pipeline either through research or acquisitions as most of its drugs will be facing serious generic competition after they go off patent in 2011. Furthermore, the rising payout and stagnating earnings show danger to the dividend growth investor. In order to maintain its dividend aristocrat status, Pfizer has to increase its dividends by November 2009.
Another stock that announced no increase in its dividends was State Street (STT), which received 5 billion from the Treasury several months ago. The company broke a 27 year streak of two dividend increases per year. In order to maintain its dividend aristocrat status, State Street has to increase its dividends by the end of 2010. As a holder of STT, I am planning to be a seller at $51, which is my breakeven price as I fear that TARP might limit dividend payments for financial companies which received funds from the Treasury.
Progressive (PGR), which is a dividend aristocrat as well, announced that it won’t be paying a dividend in 2008, which terminates its status of a consistent dividend performer.
As a dividend growth investor an unchanged dividend is not necessarily bearish news. Most companies don’t raise their dividends every year, but still could achieve a decent dividend growth rate. If I could exit the position at least at breakeven however, I would most probably invest in companies which could support an increasing dividend payments even during cyclical downturns.
Relevant Articles:
- Why do I like Dividend Aristocrats?
- State Street Corporation (STT) Dividend Stock Analysis.
Popular Posts
-
The Dividend Aristocrats index includes companies that are members of S&P 500, which have managed to raise dividends annually to their ...
-
One of my favorite publications is the Credit Suisse Global Investment Returns Yearbook. It lists a ton of historical data on the returns fo...
-
Dividend growth investing is a simple but effective strategy. It is widely misunderstood too. As a Dividend Growth Investor, I look for comp...
-
Altria Group, Inc. (MO) , through its subsidiaries, manufactures and sells cigarettes, smokeless products, and wine in the United States....
-
I review the list of dividend increases every week, as part of my review process. This is one notification that pushes me to review developm...
-
Today, I wanted to share the story of Earl Crawley , a parking lot attendant who accumulated a portfolio of dividend stocks worth $500,000, ...
-
I review the list of dividend increases every week, as part of my monitoring process. This exercise helps me monitor existing dividend holdi...
-
Tractor Supply Company (TSCO) operates rural lifestyle retail stores in the United States. The company sells its products to recreational fa...
-
A dividend growth stock is a company that has managed to grow dividends for a certain number of years. Only a certain type of quality compan...
-
Dollar General Corporation (DG) is a discount retailer that provides various merchandise products in the southern, southwestern, Midwestern,...
