When Doubling a Dividend Matters Not (POT, MOS)
Potash Corporation of Saskatchewan (NYSE: POT) announced that it was going to double its dividend payouts to holders of its common stock, some might have expected a large bump higher in the stock. The old $0.07 per quarter per share…
Potash Corporation of Saskatchewan (NYSE: POT) announced that it was going to double its dividend payouts to holders of its common stock, some might have expected a large bump higher in the stock. The old $0.07 per quarter per share payout is going to be bumped up to $0.14 per share per quarter.
At $0.56 on an annualized basis, the translation is that the dividend yield for new investors will rise from barely 0.6% to just over 1.2%. Where this runs into trouble is the recent caution in the sector and the notion that the FOMC outlook of no-rates out for almost three more years might not mean much for potash and fertilizer players. It may, but these potash and fertilizer companies are not dependent upon rates as much as they are on emerging market and frontier market demand.
For 0.6% in a dividend, the only funds that bought this stock because of that dividend was because they used the dividend as an excuse to be able to buy the stock. At $45.81 after a 1.3% share gain on Thursday, the 52-week range is $38.42 to $63.97.
The stock at least performed better than The Mosaic Co. (NYSE: MOS) with its 1.1% drop to $55.37 today.
JON C. OGG
Contact [email protected] for any questions or corrections.
Jon Ogg has been a financial news analyst since 1997. Mr. Ogg set up one of the first audio squawk box services for traders called TTN, which he sold in 2003. He has previously worked as a licensed broker to some of the top U.S. and E.U. financial institutions, managed capital, and has raised private capital at the seed and venture stage. He has lived in Copenhagen, Denmark, as well as New York and Chicago, and he now lives in Houston, Texas. Jon received a Bachelor of Business Administration in finance at University of Houston in 1992. www.247wallst.com.