The week started on a negative note on Monday as broader indexes such as Dow Industrials closed below 8000. Investor’s sentiment wasn’t helped by dividend cuts in the retail sector.
Macy’s (M) board of directors announced a steep cut in its quarterly dividends from 13.25 cents to 5 cents/share. Furthermore the company decided to eliminate 4% of its workforce by laying off 7000 employees. The retailer expects much lower EPS numbers for 2009 at 0.40-0.55/share, versus $1.21 that Wallstreet analysts had expected previously. The news that really showed that management expects worse things ahead, other than the dividend cut, is the reduction in capital spending by 100-150 million dollars in 2009.
Other retailers such as Wal-Mart (WMT) , Target (TGT) and Family Dollar (FDO), all of which are dividend aristocrats, fell slightly on the news. Check out my analysis of Wal-Mart (WMT), Target (TGT) and Family Dollar (FDO). Despite the fact that both retailers are expected to perform well in the current economic turbulence, I do not like the low dividend yields at the moment. I am seeing slowing dividend growth both at Wal-Mart and Family Dollar as well. Wal-Mart will be announcing its annual results and hopefully a dividend increase on its Earning Release on February 17. FDO already increased its dividends by 8% in 2009.I would be adding to my retail holdings in Family Dollar and Wal-Mart on dips below $18 and $32 respectively. I will be looking at initiating a position at Target (TGT) on dips below $21.40. The major competitor to Wal-Mart is known to be increasing its dividends at a slower pace in the single digits during tough periods such as the 2000-2002 slowdown.
If the January Barometer is correct, we will be seeing lower prices by the end of the year, so seeing lower prices in the retail stocks mentioned above won't be surprising at all.
Full Disclosure: Long WMT and FDO
Relevant Articles:
- Wal-Mart Dividend Analysis
- FDO Dividend Analysis
- Six Dividend Stocks Raising the bar
- Dividend Aristocrats List for 2009
Popular Posts
-
I review the list of dividend increases every week, as part of my monitoring process. I tend to focus my attention on companies that have an...
-
I just learned that Dominion Energy (D) is going to cut annual dividends to $2.50/share, from $3.76/share. This ends an 18 year track record...
-
Hitting $1,000 in Monthly Dividend Income How long should I be investing for, before hitting $1,000 in monthly dividend income? This i...
-
One of my favorite exercises is reviewing the list of dividend increases. As a dividend growth investor, I buy companies with an establish...
-
Charlie Munger is Warren Buffett’s business partner at Berkshire Hathaway. He is a successful lawyer, and investor, who was instrumental i...
-
Sysco Corporation (SYY) markets and distributes a range of food and related products primarily to the foodservice or food-away-from-home ind...
-
I review the list of dividend increases as part of my monitoring process. This helps me to see whether the companies I own continue to progr...
-
Visa Inc. (V) operates as a payments technology company worldwide. The company facilitates commerce through the transfer of value and inform...
-
Update 06/29/2020: Wells Fargo (WFC) announced that it may have to cut dividends after releasing results on July 14, 2020. Source: WFC Anno...
-
Right after the market closed on Monday, June 29, I learned that Simon Property Group (SPG) is cutting dividends per share. Simon is a real ...
