The return of Financial Dividends
The institutions include US Bancorp (USB), Wells Fargo (WFC), JPMorgan Chase (JPM) and State Street (STT).
US Bancorp (USB) raised its quarterly distribution from 5 to 12.50 cents/share. This is still below the 42.50 cents/share payment that the bank was paying before the dividend cut. Yield: 1.80%
Wells Fargo (WFC) raised its quarterly dividend from 5 to 12 cents/share. The company paid 34 cents/share before joining the crowd of dividend cutters in March 2009. Yield: 1.50%
State Street (STT) raised its quarterly dividend from 1 to 18 cents/share. I sold my position in the stock right after the dividend cut in 2009. In retrospect I could have held on to it, but given the fact that most dividend cutters in 2007 and 2008 ended up going bankrupt this was not an unreasonable decision. Yield: 1.60%
JPMorgan Chase (JPM) raised its quarterly dividend from 5 to 25 cents/share. Back in February 2009 the company cut its dividend from 34 cents/share to 5 cents/share. Yield: 2.20%
The future of financial dividends is still unclear, as it would be largely dependent on the growth in earnings in the current environment. I would definitely wait to see where distributions go from here. I also require at least a decade of consistent dividend increases before initiating a position in a stock, which is why I would be looking elsewhere for financial dividends for the next few years.
I have also highlighted consistent dividend raisers from other sectors which announced their intentions to boost distributions below:
Air Products and Chemicals, Inc. (APD) provides atmospheric gases, process and specialty gases, performance materials, equipment, and services worldwide. The company raised its quarterly dividend by 18.40% to 58 cents/share. This marked the 29th consecutive annual dividend increase for this dividend aristocrat. The stock currently yields: 2.70% ( analysis)
Realty Income Corporation (O) engages in the acquisition and ownership of commercial retail real estate properties in the United States. The monthly dividend company raised its quarterly dividend to $0.1445625/share. This dividend achiever has consistently raised dividends since going public in 1994. The ten year annual dividend growth rate is 4.50%. Yield: 5% ( analysis)
Williams-Sonoma, Inc. (WSM) operates as a specialty retailer of home products. It offers culinary and serving equipment, including cookware, cookbooks, cutlery, informal dinnerware, glassware, table linens, specialty foods, and cooking ingredients; and bridal and gift items under the Williams-Sonoma brand name. The company raised its quarterly dividend by 13.30% to 17 cents/share. Williams-Sonoma has raised distributions for six consecutive years. Yield: 1.70%
Xilinx, Inc. (XLNX) engages in the design, development, and marketing of programmable logic solutions. The company raised its quarterly dividend by 18.75% to 19 cents/share. Xilinx has raised distributions for eight years in a row. Yield: 2.40%
Air Products & Chemicals (APD) was out of my buy range before the dividend increase. After the generous distribution hike it fits my entry criteria nicely. I would look forward to adding to my position in the stock when I have the funds available. As far as Realty Income (O) is concerned, many investors have been disappointed with the anemic increases in distributions over the past 2 years. Luckily yield hungry investors have been bidding the stock price higher, which has increased total returns for earlier investors in this real estate investment trust. The main reason why I view Realty Income as a hold and not a buy is that the stock is not yielding as much as it used to and its dividend growth has been pretty much non-existent over the past 2 years. I would consider adding to my position in the stock on dips below $29 however.
Full Disclosure: Long APD and O