The dividend aristocrats index has had five dividend cuts so far this year. Because of the way that the index is rebalanced, the dividend cutters will remain a part of the elite basket of S&P 500 companies which have consistently raised their dividends for over 25 consecutive years. Unless a member of the Dividend Aristocrats index is removed from the S&P 500, it won’t be removed from the elite income index.
The five companies, which cut dividends so far in 2009, will most likely be booted out of the index at the annual December reconstitution.
Back in February, General Electric (GE) lowered its quarterly payment to $0.10 from $0.31/share for the first time since 1938 in an effort to save 9 billion dollars annually and maintain its AAA rating.
On February 5, the board of State Street (STT) announced that they would be cutting the quarterly dividend from $0.24/share to $0.01/share. STT joined the ranks of other financial institutions such as Bank of America (BAC) and Citigroup (C) with in this move to bolster liquidity.
On February 25 Gannett (GCI) slashed its quarterly dividends by 90% to $0.04/share. The company is responding to the recession in US and UK by reducing the payout to shareholders, which will save it close to $325 million/year. The new dividend is a cent and a half lower than its first dividend in 1967 of $0.054/share. The move comes about a month after company executives said they would meet to evaluate the dividend.
In early march US Bancorp (USB) board of directors cut the quarterly dividends by 88% to $0.05/share. The move wasn’t surprising since USB couldn’t cover its previous payment of $0.425 for the last two quarters. In November, USB received $6.6 billion from TARP. In December the bank failed to increase its dividend to shareholders for the first time 37 years.
When Pfizer (PFE) announced its intention to acquire pharmaceuticals rival Wyeth (WYE) in order to extend its portfolio of drugs, the company cut its dividend payment in half. This helped the company keep cash in order to finance the deal. A consortium of banks has also provided commitments for a total of $22.5 billion in debt, $22.5 billion in cash and 23 billion in equity.
Despite the fact that these companies are still members of the S&P Dividend Aristocrats index, they will be removed from it by the end of the year. Although Value Investors could find some of them attractive at current levels, dividend growth investors have little incentive to acquire any of them until new policies of consistent dividend growth, supported by healthy increases in the bottom line, are being implemented.
Relevant Articles:
- Dividend Aristocrats List for 2009
- When to sell my dividend stocks?
- Why do I like Dividend Aristocrats?
- Historical changes of the S&P Dividend Aristocrats Index
Popular Posts
-
As part of my process, I update the list of dividend champions every month . I find it extremely helpful to go through the process of updati...
-
Eaton Vance Corp. (EV) engages in the creation, marketing, and management of investment funds in the United States. It also provides investm...
-
As part of my monitoring process, I review the list of dividend increases every week. This is a helpful exercise that lets me identify divi...
-
As part of my monitoring process I review the list of dividend increases every week . Every month, I also review and update the list of divi...
-
As part of my monitoring process, I review the list of dividend increases every week . I use this process to evaluate existing holdings and...
-
I review the list of dividend increases every week, in an effort to monitor existing holdings as well as identify companies for further res...
-
As a dividend growth investor, my goal is generate enough dividend income to pay for my expenses in retirement. I focus on dividend income,...
-
I have been a dividend investor for over a decade. As part of my journey, I have developed a system for identifying attractively valued divi...
-
PPG Industries, Inc. (PPG) manufactures and distributes paints, coatings, and specialty materials in the United States and internationally. ...
-
Last week, there was a correction in the stock market. For some reason, be it higher interest rates, trade wars, or fears of future inflatio...
