2011 US Dividend Growth Surpasses Last Year's TotalAccording to a report released by Standard & Poor’s today, dividend increases by US companies totaled $11.2 billion during the second quarter, a 70% increase over the same period last year.
American corporations initiated an additional $1.47 billion in dividends during the quarter, beating last year’s second quarter initiation total by more than 90%. In all, the approximately 7,000 publicly traded companies that report dividend information to S&P have pushed their payouts higher by a net total of $30 billion in 2011, already topping the 2010 full-year output of just $26.5 billion.
Positive dividend actions (raises, initiations) increased by 33% during the second quarter to 444, while negative actions (reductions, suspensions) fell 38% year-over-year to just 21. The 21.1-to-1 ratio of positive-to-negative actions is the highest second quarter figure reported by S&P since 2007 (30.1-to-1), and more than double last year’s second quarter figure (9.9-to-1). During the second quarter of 2009, negative actions (250) actually outnumbered positive actions (233).
Banner's Reverse-Split Boosts Stock, Cripples DividendBanner Corporation (BANR) declared a quarterly dividend of $0.01 per share this morning, the same amount paid each of the last nine quarters by the bank holding company. This wouldn’t be notable at all if Banner hadn’t artificially inflated its share price with a 1-for-7 reverse stock split last month.
Given the decreased number of shares now held by its investors, the parent company of Banner Bank and Islanders Bank needed to declare a quarterly dividend of $0.07 per share to maintain the level of cash received by shareholders prior to the reverse split. Instead, Banner has effectively cut its payout by 86%. This will likely blindside investors, considering none of the press releases or SEC filings related to the reverse split mention an adjustment to the company’s dividend output.
Analysts currently expect the company to lose money in both 2011 (-$1.99 per share) and 2012 (-$0.10 per share), so this move isn’t necessarily a bad one — in fact, it may be the right one. But shareholders deserve more transparency.
Shares of BANR opened Tuesday’s session trading at $17.77, where they now yield just 0.23%. That’s a sharp drop from the 1.58% dividend yield shareholders likely assumed they had going into the holiday weekend.
I reached out to Banner’s investor relations department immediately after reading the press release, but they have yet to return my call. I will update this post if they have anything interesting to say on the matter.
National Oilwell Varco to buy Ameron InternationalNational Oilwell Varco (NOV) this morning announced plans to buy Ameron International (AMN) for $85 per share in cash. Each company’s board of directors unanimously approved the deal, which will pay Ameron shareholders a 28% premium to Friday’s closing price.The transaction will bring together two companies with very different dividend compositions. The low-yielding National Oilwell, which produces equipment and components for essentially every segment of the oil and gas industry, has a very young payout with promising growth prospects. Ameron, which manufactures infrastructure products like wind towers and fiberglass piping, has been returning cash to its shareholders for decades and carries a solid yield, but hasn’t raised its dividend in more than three years.
Shares of NOV opened today’s session trading slightly higher at $78.73 (+0.54%), where they feature a 0.56% dividend yield. The company initiated its quarterly dividend in November 2009 and gave shareholders a 10% raise a year later. With a forward payout ratio in the single-digits, National Oilwell was certainly in a position to provide rapid dividend growth prior to putting this deal together. The company expects the transaction to be accretive to 2012 earnings, which should only accelerate things.
Shares of AMN predictably jumped close to the transaction price in early trading, opening at $84.33 (+27.25%), where they yield 1.42%. Ameron has been paying a dividend for decades, but hasn’t raised its payout in 13 quarters. The company did distribute a special dividend of $3 per share last November, however.
Marathon Completes Refiner Spin-OffMarathon Oil Corporation (MRO) became an independent upstream company this morning after completing the spin-off of its refining operations. Marathon Petroleum Corporation began trading under the symbol “MPC” when the market opened, instantly becoming the country’s fifth-largest oil refiner.
Marathon investors received one share of MPC for every two MRO shares they held coming into the day, as outlined in the plan originally approved back in January.
Shares of MRO closed Thursday’s session trading at $52.68, and opened at $33.28 this morning. MPC debuted at $41.20, so Marathon shareholders got a nice 2.27% gain right off the bat. (Two shares of MRO were worth $105.36 last night, while two shares of MRO and one share of MPC totaled $107.76 at today’s open.)
Dividend Ramifications: The companies are splitting up Marathon’s quarterly dividend, which stood at $0.25 per share before the split. Moving forward, investors will receive $0.15 from each share of MRO and $0.20 from each share of MPC on a quarterly basis. At today’s opening levels, shares of MRO yield 1.80% while shares of MPC yield 1.94%.
Bank of the Ozarks Hits New High on Latest Payout HikeBank of the Ozarks (OZRK) declared a quarterly dividend of $0.19 per share today, which is a 5.6% increase over its previous payout and a 26.7% improvement over the dividend paid during the same period last year.
This marks the sixth time in the last seven quarters the bank holding company has given its shareholders a raise.
Shares of OZRK are currently trading at $52.40, which is a new all-time high. The stock now yields 1.45%, and is up more than 50% in the last year (including 20% so far in 2011).
Bank of the Ozarks is currently on pace to pay an increased dividend total for the 13th consecutive year – or every year since it began returning cash to shareholders in 1998. The company has raised its payout by an annual average of about 23% over that span.