Stocks might have taken it on the chin on Friday due to Janet Yellen and the Federal Reserve not having enough confidence in the global markets to handle a rate hike, but many aspects of corporate America are running quite well. In fact, many companies are still hiking dividends and announcing large share buyback plans. These are the two top methods of returning capital to shareholders.
24/7 Wall St. reviews most key dividend hikes and large share repurchase plans daily, weekly and monthly. It turns out that of the many announcements that are made, some dividend and/or buyback announcements stand out much more than others. In fact, some buybacks and dividends are just too big to ignore when they are announced.
What investors have to consider is what yield they are receiving. They also have to consider what a buyback announcement means, versus either an average volume or a company’s market cap. One consideration is that stocks do not always react immediately to such announcements. Sometimes the benefits are not seen for days, weeks or months.
These are the seven buyback announcements and/or dividend hikes from just the past week that are just too large for investors to ignore.
Microsoft Corp. (NASDAQ: MSFT) raised its dividend last week, to $0.36 per share from a prior $0.31 payout. Microsoft’s yield was already screening at 2.8%, and now it will rise to 3.3% after the hike takes place. Let’s think about what this means with a $350 billion market cap: Microsoft has just committed to pay close to $11.5 billion in annual dividend payments, and you know companies cannot raise dividends and then consider lowering those payments soon. Sadly, this news was overlooked during much of the week as it was released late on Tuesday night. The stock’s $43.48 close on Friday was not even above the closing price when the hike was announced.
Northrop Grumman Corp. (NYSE: NOC) is best known for being a defense company, and it announced this past week that its board of directors has authorized an additional $4 billion to buy back common shares from time to time. No specifics were given other than being subject to market conditions and in open market or private transactions. Northrop Grumman has a $31.7 billion market cap, so this is not exactly small potatoes.