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Dividend Roundup: CMI, AOS, MCHP, KLAC, WWW

July 12, 2011 | About:
Here are the five latest dividend-related developments featured on The Dynamic Dividend:

Cummins Gives Shareholders Another 50% Raise

Cummins (CMI) declared a quarterly dividend of $0.40 per share this morning, which is a 52% improvement over the $0.2625 paid each of the previous four quarters by the manufacturer of engines, power generation systems and other related products.

Today’s dividend hike comes almost exactly one year after Cummins juiced its payout by 50% in July 2010. The company is currently on pace to increase its dividend output by a double-digit margin for the sixth consecutive year, having raised its payout by an astounding 433% over that short period.

Shares of CMI opened Tuesday’s session trading at $104.75, where they now feature a 1.53% dividend yield.

A.O. Smith's Biggest Dividend Hike in 16 years

A.O. Smith (AOS) declared a quarterly dividend of $0.16 per share this evening, which is a 14% improvement over the $0.14 paid each of the previous four quarters by the water heating equipment manufacturer. The company is currently on pace to improve its dividend output for the 19th consecutive year.

This is by far the largest dividend hike from the Class E Dividend Dynamo since a 15% increase way back in 1995, and the first double-digit raise given to its shareholders since a 13% boost in 1996. Needless to say, it blows away the forecast I made (“an increase of 5-9%”) when I included the company in my July dividend increase preview (“These Six Companies Will Raise Their Dividends in July”).

Shares of AOS closed Monday’s session trading at $41.88, where they now feature a 1.53% dividend yield.

Microchip Sinks to New 2011 Low on Slashed Guidance; Yield Tops 4%

Microchip Technology (MCHP) downgraded its first quarter guidance on Monday evening, sending shares to a new 2011 low in today’s early trading.

The company now expects to earn just $0.47 to $0.49 per share on a 1.5% sequential decrease in revenue during its first quarter. Previously, the company had forecast a profit of $0.53 to $0.55 per share with sales growing 1% to 6% sequentially. Prior to the news, analysts were expecting the semiconductor company to earn $0.60 per share on $393.5 million in revenue, which would have topped its Q4 sales figure by 3.6%.

Microchip attributed a slowdown in its automotive business to supply issues from other manufacturers as a result of the earthquake in Japan, and blamed poor global economic conditions for softness in its consumer business.

Shares of MCHP, which were up 9.6% on the year as of yesterday’s close, gave back all of those gains overnight, opening today’s session trading at $33.58 (-10.41%). The stock hasn’t closed below $34 since Nov. 30, 2010. That’s a pretty sharp decline for a stock that was hitting new 52-week highs barely two months ago.

At today’s opening price, MCHP features a 4.12% dividend yield. The company has raised its dividend for seven consecutive quarters, although growth has been modest at best over that period. Microchip has boosted its payout by one-tenth of a penny each quarter, pushing its dividend rate higher by a total of just 2.06% over the course of two years.

KLA-Tencor Boosts Dividend by 40%

KLA-Tencor (KLAC) announced a 40% increase to its dividend rate this morning, improving its quarterly payout from $0.25 to $0.35 per share. This is the second consecutive year the company has given its shareholders a large raise.

Last year, the supplier for the semiconductor and related microelectronics industries boosted its payout by 67%. KLA-Tencor has now raised its dividend three times since it began returning cash to shareholders in 2005, improving its payout by a total of 192% over that period.

Shares of KLAC opened Tuesday’s session trading at $41.38, where they now feature a 3.38% dividend yield — one of the fattest sustainable yields in the technology sector.

Wolverine Beats Q2 Estimates, Fails to Raise Guidance

Wolverine Worldwide (WWW) reported second quarter results that beat Wall Street’s expectations this morning, but failed to raise its full-year outlook, pushing shares lower by as much as 15% in early trading.

The outdoor and work footwear company posted earnings of $0.48 per share on a record $310.1 million in revenue, beating the consensus estimates for both profit ($0.46 per share) and sales ($294.3 million). Net earnings were up 39% year-over-year, while total revenue grew by 20.1%, powered by double-digit sales growth in all of Wolverine’s brand groups and its consumer direct business. It was the company’s fourth consecutive quarter of record revenues.

Wolverine also reaffirmed its full-year guidance for both earnings ($2.40 to $2.50 per share) and revenue ($1.38 to $1.42 billion). Those ranges continue to bracket the average analyst forecast — which calls for a profit of $2.48 per share and sales of $1.40 billion — but investors were apparently looking for the company to raise its outlook.

Shares of WWW sunk as low as $36.10 (-15.26%) in early trading, a price that produces a 1.33% dividend yield. After that initial massacre, the stock bounced back a bit to trade as high as $39.86 (-6.43%) before noon, where it yields 1.20%.

Wolverine has raised its annual dividend output in 16 of the last 18 years, punctuated by a string of nine consecutive years with a double-digit increase (2000 to 2008) to kick off the new millennium. The company gave its shareholders a 9% raise in February, ending a span of 12 quarters without a dividend hike.

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Dynamic Dividend
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