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
-
I am a big fan of Warren Buffett, the Oracle of Omaha. His letters to shareholders are an excellent resource for students of value investing...
-
I recently read an interesting paper titled " Which U.S. Stocks Generated the Highest Long-Term Returns? " by prof Hendrik Bessemb...
-
I review the list of dividend increases every single week, as part of my monitoring process. This exercise helps me to monitor existing hold...
-
The Kroger Co. (KR) operates as a retailer in the United States. The company operates supermarkets, multi-department stores, marketplace sto...
-
“Good decisions come from experience. Experience. comes from bad decisions.” - Mark Twain I am a big fan of long-term investing. This ...
-
With Dividend Growth Stocks, when I am wrong, the most I can lose is the amount I invested, minus any dividends I allocated elsewhere. But w...
-
One of my favorite Berkshire Hathaway letters to shareholders is the one from 2013 . It left a very big impression on me, mostly because it ...
-
I review the list of dividend increases every week, as part of my monitoring process . This exercise is one of the steps that helps me evalu...
-
I review the list of dividend increases every week, as part of my review process. This exercise helps me to monitor existing holdings. It al...
-
The goal of every Dividend Growth Investor is to generate enough dividends to pay for their retirement. It takes patience, persistence and p...