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Oracle and U.S. Bancorp's Jumping Dividends

June 27, 2013 | About:
Monica Wolfe

Monica Wolfe

133 followers
Oracle (ORCL), one of the most profitable (if not the most profitable) software companies in the industry, paid its first dividend in May 2009 of $0.05 per share. The company raised it to $0.06 per share in March 2011 and it has stayed the same up until the release of its most recent quarterly earnings. While Oracle’s revenue remained the same for the second quarter in a row, the company decided to double its dividend, buy back shares and move from Nasdaq to the New York Stock Exchange.

Oracle released its fourth quarter fiscal year 2013 results on June 20:

· GAAP total revenue unchanged at $10.9 billion and non-GAAP revenues unchanged at $11.0 billion.

· GAAP net income was up 10% to $3.8 billion and non-GAAP net income was down 1% to $4.1 billion.

· GAAP EPS up 17% to $0.80 non-GAAP EPS was were up 5% to $0.87 per share.

“A record level non-GAAP operating margin of 47% in FY13 enabled us to generate over $14 billion in operating cash flow during the year,” said Oracle President and CFO, Safra Catz. “We returned almost 90% of that to shareholders through dividends and share repurchases while increasing the cash on our balance sheet to $32 billion. Consistently increasing our margins, cash flow and cash balance has allowed us to double our current quarterly dividend.”

Alongside its financial results, Oracle’s board of directors also declared a quarterly cash dividend of $0.12 per share of outstanding common stock, representing a full 100% increase over its current $0.06 per share. This increased dividend will be paid on August 2 to stockholders of the record as of the close of business on July 12. Oracle’s new yield is at 1.6% which is significantly more than its 0.7% yield from before its most recent payout but still significantly less than

Not only did the Board double the quarterly dividend, but the company also announced that its Board authorized the repurchase of up to an additional $12.0 billion of common stock under its existing share repurchase program.

The last perk that Oracle offered in its most recent financial release was that the company has applied to list its common stock on the NYSE under its current symbol “ORCL.” The Board deemed that the proposed transfer would be in the best interest of its stockholders, customers and partners. Oracle expects that its common stock will begin trading on the NYSE on July 15, 2013.

Oracle provides enterprise software and computer hardware products and services. Its software, hardware systems and services businesses develop, manufacture, market, host and support database and middleware software, applications software, and hardware systems, with the latter consisting mainly of computer server and storage products.

Oracle’s 10-year price, revenue and net income:

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Peter Lynch’s Valuation Chart shows that the company appears to be undervalued:

1372367404116.png

Oracle Corp. has a market cap of $142.58 billion; its shares were traded at around $30.45 with a P/E ratio of 14.30 and a P/S ratio of 4.00. The dividend yield is up to 1.60%. The company had an annual average earnings growth of 20% over the past 10 years. GuruFocus rated Oracle the business predictability rank of 5-star.

Oracle is a Guru-favorite company, belonging in 15 gurus’ portfolios. Click here to see these gurus’ holding histories of Oracle.

U.S. Bancorp (USB) also made a big jump in dividend growth as the company upped its quarterly cash dividend from $0.195 per share to $0.23 per share.

U.S. Bancorp is the parent of U.S. Bank, which is currently the fifth-largest commercial bank in the U.S. On June 17, U.S. Bancorp made its increase in their quarterly common dividend by 18%, meaning that they will be giving USB stockholders approximately an additional $259 million per year. This increase sets the yield for USB at 2.6%.

In March of 2009, U.S. Bancorp was forced to slash its quarterly dividend to $0.05 per share where it stayed for two years. In March 2011 the company began growing its dividend again. Despite the cut USB had to make in their dividend, they have paid a quarterly cash dividend since the founding of the company in 1863.

In April, the bank holding company announced a $2.25 billion stock-buyback program. Both the increase in dividend and stock-buyback program were approved by the Federal Reserve Board on March 14.

S&P has reported that they believe U.S. Bancorp maintains:

The best fundamentals of all large U.S. banks, in terms of loan growth, credit quality, allowance coverage, low non-interest expenses, a low-cost deposit base, and high-quality earnings not dependent on reserve releases.

U.S. Bancorp’s historical price, revenue and net income:

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According to the Peter Lynch Valuation Chart, USB appears to be undervalued:

1372369211363.png

U.S. Bancorp has a market cap of $66.86 billion; its shares were traded at around $36.14 with a P/E ratio of 12.50 and a P/S ratio of 3.40. U.S Bancorp has had an annual average earnings growth of 19.6% over the past 5 years.

Warren Buffett and 28 other gurus hold a stake in USB. Click here to see their holding histories.

Rating: 3.3/5 (7 votes)

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