The Great Overlooked Dividend Hikes During the Panic (COV, CXS, DISCA, FITB, F, HST, LVS, LMT, MCD, MSFT, NEM, O)
This was no good week for stocks even if the markets have bounced off the lows numerous times on Friday. The low of the DJIA on Friday morning of 10,638 was down about 7.5% from the prior Friday’s close of $11,509.09. Ugly no matter how you cut it. What is so interesting is that companies are still making strides in increasing their payouts in dividends to shareholders as a clear message that their businesses are not at all imploding. Maybe things in China are slowing and maybe the Europeans have us fearing another 2008 to 2009 panic, but these companies are raising dividends in an effort to tell you that they believe that they have clarity in their earnings ahead.
The following companies either announced dividend hikes or hinted at dividend hikes soon: Covidien plc (NYSE: COV); CreXus Investment Corp. (NYSE: CXS); Discovery Communications, Inc. (NASDAQ: DISCA); Fifth Third Bancorp (NASDAQ: FITB); Ford Motor Co. (NYSE: F); Host Hotels & Resorts, Inc. (NYSE: HST); Las Vegas Sands Corporation (NYSE: LVS); Lockheed Martin Corporation (NYSE: LMT); McDonald’s Corporation (NYSE: MCD); Microsoft Corporation (NASDAQ: MSFT); Newmont Mining Corp. (NYSE: NEM); and Realty Income Corporation (NYSE: O). These are not even all of the hikes as there were many dividend announcements from smaller companies during the week.
Covidien plc (NYSE: COV) is showing that healthcare products aren’t so worrisome after all. The company announced on the evening of September 22 that it increased its quarterly dividend by 12.5% from $0.20 to $0.225 per ordinary share. The new $0.90 anualized payout now generates a dividend yield of roughly 1.97%.
CreXus Investment Corp. (NYSE: CXS) declared on September 20 a bump to its third quarter dividend of $0.30 per share, a 25% gain from the prior $0.25 payout. As with all entities of this sort, it is hard to know whether or not this payout can be continued as income from quarter to quarter can fluctuate substantially. To prove the point, this annualized dividend would be approximately 13% and around $9.15 its 52-week range is $8.26 to $13.51. The company did note, ” We believe our shareholders will continue to see the benefits of the breadth and diversity of our platform in the quarters and years ahead.”
Discovery Communications, Inc. (NASDAQ: DISCA) is not a dividend payer, but early this week came word from the Goldman Sachs Media conference that its CEO is pushing for a stock buyback and has said that a dividend initiation is possible. For a media company with no dividend, that could be a coup. The stock is close to $40 per share and its estimates for earnings from Thomson Reuters are $2.36 EPS for 2011 and $2.81 EPS for 2012.