Investing

More Than 20 Great Companies Which Refuse To Pay Dividends (AMZN, AMGN, AAPL, BBBY, BRK-A, CBB, DELL, DG, DLTR, EBAY, ERTS, EMC, ESRX, FLEX, GOOG, JACK, NDAQ, SYMC, UAL, URBN, WDC, YHOO, ZBRA, CSCO, VMW, MHS)

Apple Inc. (NASDAQ: AAPL) is another one that it is often criticized for not paying a dividend, but what right do any of us from the outside have to say that it is not doing the right thing?  Apple has fired on all cylinders and the earnings performance this quarter was beyond amazing.  The has a forward price earnings multiple of only 12.7 and a return on equity (ROE) of 42%.  Its market cap is $372 billion and it could be on its way to having literally $100 billion in cash on its balance sheet.  The recent share price was $398.50 and the 52-week trading range is $235.56 to $404.23.  Apple is another company which has habitually been knocked for not paying a dividend to shareholders.  Still, does it even have to listen?  This has been a monster growth story that does not yet seem over.  Until someone is actually succeeding Steve Jobs permanently and until the company feels that the dividend argument makes sense, we would advise that income investors look for a cash payout elsewhere.  Still imagine the reaction if you got the headlines that Apple was splitting its stock 8-for-1, was announcing a 15% cash dividend, was going to commit to returning capital by steady dividends, while still announcing that it has not even captured one-third of its total market goals.

Bed Bath & Beyond, Inc. (NYSE: BBBY) has been a massive growth story.  The retailer has a forward price earnings multiple of almost 14 and a return on equity (ROE) of 21.6%.  Its market cap is $14.2 billion.  The recent share price was $58.00 and the 52-week trading range is $35.55 to $60.55.  What is amazing is that ‘The Triple-B’ has no payout at all.  It has been public since the early 1990s and it has announced a 2-for1 stock split on 4 different occasions.  The company grows and grows and its model may not have as much upside in the next decade compared to the last decade.  Retail stocks have started paying higher dividends, and this seems a real candidate for a dividend payer.  After all, it may be an arguable point but half of the households may think that the client base does not even know what a recession is.  What makes Bed Bath & Beyond so different from many retailers is its solid balance sheet with nearly $2 billion in cash and liquidity and nearly no significant long-term debt.  In fact, the books are so de-leveraged that it could even announce a debt offering and a solid dividend accompanied by a one-time dividend.

Berkshire Hathaway Inc. (NYSE: BRK-A) is strange because it is massive, it is widely watched by investors, and it has very few analysts that cover the company.  The screen from Finviz.com showed a return on equity of 7.1%.  Its market cap is $188 billion.  The recent share price was $112,000.00 and the 52-week trading range is $109,925.00 to $131,463.00.  Warren Buffett is now an old man who commands a massive audience when he speaks, but all of its his old analogies and references for the great future are just not believable any longer.  Maybe Berkshire Hathaway can just keep making multi-billion dollar acquisition after multi-billion dollar acquisition.  The problem is that Buffett has discussed the book value growth and share performance not having the same opportunities ahead as what was seen up until the last decade.  Buffett has also hinted that the firm could ultimately pay a dividend.  After 50 years or so, is it too much to ask from a conglomerate and financial betting engine?  Maybe it will take the Buffett successor to declare a high payout rather than Buffett himself.  If this is not going to grow as fast as the market and if the “Buffett Premium” is in for this stock, then ultimately the firm has no choice but to pay its shareholders with quarterly income. With the billions and billions it has, perhaps a dividend yield of 2% isn’t asking too much.

Cincinnati Bell Inc. (NYSE: CBB) is one of the dismal communication and telecom providers that is small enough and has lagged enough that something has to be done here.  The company has a 11.5 forward price earnings multiple.  Its market cap is $677 million.  The recent share price was $3.41 and the 52-week trading range is $2.27 to $3.64.  This stock has been dead money for so long that it has been mostly forgotten about.  Our take is that it has long been a regional acquisition possibility in the world of telecom M&A.  Unfortunately, its books are leveraged and its income is not growing.  When you have AT&T and Verizon paying north of 5% in dividend yields, what is the point of investing in the weakest telecom of the old Bells without a dividend?  With a regional footprint that includes adjoining markets in Ohio, Indiana, and Kentucky, dividend investors may feel a bit “dissed” by a telecom operation that dates back to the 1800s.

Dell Inc. (NASDAQ: DELL) has a forward price earnings multiple of 8.9 and a return on equity (ROE) of 45.5%.  Its market cap is $31 billion.  The recent share price was $16.44 and the 52-week trading range is $11.34 to $17.60. Dell has been making acquisitions to transform itself and it has actually been able to grow in a world now dominated by Apple.  HP’s woes are playing in Dell’s favor.  What is amazing is that Dell has nearly $15 billion in cash before considering its debt implications.  The company could not afford to pay anywhere near all of its cash out, but there is ample room for a solid dividend here that would allow it to be one of the better dividend in technology.  The big challenge is an identity crisis, because investors still want to think of the PC business as a growth business.  Making PCs now is now almost no different than making high-end toasters.  The thing keeping a large payout from coming here is the ability to remain flexible for a large acquisition if such an opportunity arises.  Still, Dell’s only true competitor which does not pay a dividend is Apple and Steve Jobs can get away with no dividend.