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 usually focus my attention on the companies with a...
-
I review the list of dividend increases every week, as part of my monitoring process. This process helps me identify companies for further r...
-
One of the most common questions I receive relates about the idea of how to invest a lump-sum amount. I believe that the answer is not a one...
-
Charlie Munger is Warren Buffett’s business partner at Berkshire Hathaway. He is a successful lawyer, and investor, who was instrumental i...
-
A famous saying goes that there are two things certain in this world: death and taxes. While I am pretty sure I can’t escape death, I know t...
-
Paychex, Inc. (PAYX) provides payroll, human resource (HR), retirement, and insurance services for small to medium-sized businesses in the U...
-
Atmos Energy Corporation (ATO) engages in the regulated natural gas distribution, and pipeline and storage businesses in the United States. ...
-
I review the list of dividend increases each week, as part of my monitoring process. There were 39 companies that increased dividends over t...
-
The goal of this website is to inspire readers to identify their goals and objectives, and then create a process to achieve them. I shared t...
-
Carlisle Companies Incorporated (CSL) operates as a diversified manufacturer of engineered products in the United States, Europe, Asia, Cana...
