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
-
I review the list of dividend increases as part of my monitoring process. This process helps me review how the companies I own are doing. It...
-
The Dividend Aristocrats List includes S&P 500 companies which have managed to increase annual dividends for at least 25 years in a row....
-
I review the list of dividend increases as part of my monitoring process. This exercise helps me monitor existing holdings. It also helps me...
-
I wanted to present some general discussion about fixed income securities. I will then present the companies I invested in this week, follow...
-
Warren Buffett is one of the most successful investors in the world. He is the chairman and controlling shareholder of Berkshire Hathaway, ...
-
Successful people identify their goals, break them down into small actionable steps, and take action towards achieving them. Unsuccessful pe...
-
As part of my monitoring process , I review the list of dividend increases every week. This is helpful as a method to observe recent devel...
-
As a dividend growth investor , I look for solid companies to invest my hard earned money in. I look for companies that can grow earnings,...
-
Peter Lynch is probably one of the best-known stock pickers of our time and certainly among the most successful. He was portfolio manager of...
-
Dividend growth investing involves the selection of companies based on a set of criteria such as valuation, strong brands, strong competiti...
