Wednesday, 13 June 2012

Companies start to pay or increase dividends

Caterpillar and Target, among others, are raising quarterly dividends for shareholders while Dell said earlier this week it would begin paying a dividend, a first for the computer mak

It's a sign that companies have been able to amass cash since the financial crisis of 2008 and are feeling flush enough to share the money with shareholders.
Caterpillar is raising its quarterly cash dividend 13%, biggest%age increase in the dividend since the financial crisis hit in the fall of 2008.
Caterpillar (CAT) said Wednesday that its board approved a 6-cent increase to put the quarterly cash dividend at 52 cents a share, up from 46 cents.
The new dividend will be payable on Aug. 20 to stockholders of record at the close of business July 20.
In August 2008, the Peoria, Ill., heavy machinery manufacturer increased its dividend 16.7%.
Despite the latest dividend hike, shares of Caterpillar fell $1.91, or 2.19%, to $85.14 .
Target said Wednesday its board approved the increase of its quarterly dividend by 6 cents, or 20%, to 36 cents.
The Minneapolis-based retailer will pay the dividend Sept. 10 to shareholders of record as of Aug. 15.
Target (TGT) has paid a dividend every quarter since going public in 1967.
The announcement was made ahead of its annual shareholders' meeting, which will take place on Wednesday at a new store in Chicago.
Like most retailers, Target has had the challenge of trying to find ways of luring cautious U.S. shoppers into stores amid a flood of mixed economic news that has them scrutinizing every purchase. The job and housing markets are still shaky, but falling gas prices have given consumers hope.
Target, which mixes stylish clothes and trendy decor under the same roof as toothpaste and cereal, recently has had success drawing customers into stores with two growth initiatives. It has been offering a larger selection of food, and it launched a program in 2010 that gives shoppers a 5% discount when they pay with Target-branded credit and debit cards.
The retailer, which operates 1,763 stores across the U.S., reported last month that its first-quarter profit rose 1.2% to $697 million, or $1.04 per share, in the quarter ended April 28. Excluding costs associated with its expansion into Canada next year, the per-share results would have been $1.11. Revenue rose 5.9% to $16.86 billion.
Revenue at stores open at least a year rose 5.3%, strongest performance in six years for that period. The measure is considered a key indicator of a retailer's health.
Based on the better-than-expected results, Target raised its full-year profit guidance last month by 5 cents. Target now expects to earn $4.60 to $4.80 per share.
In afternoon trading, Target shares rose 20 cents to $58.36, the high end of its 52-week per share range of $45.28 to $59.40.
Dell (DELL) said it plans to pay a dividend beginning in its fiscal third quarter, becoming the latest technology company looking to boost shareholder value and attract a new group of investors.
The Round Rock, Tex., company said its first-ever dividend would begin at a rate of 8 cents share. That results in a yield of 2.7% and costs the company about $560 million a year.
Shares, down 23% over the past 12 months through Tuesday's close, climbed 2.5% to $12.27 after hours.
Analysts say the move could open Dell up to a new class of investor, while also potentially boosting its share price. Dell has also bought back stock at a rapid rate, reducing its share count by nearly 14% over the past four years. The company had 1.75 billion shares of common stock outstanding as of May 24.
Dell's move comes as the company has been attempting to remake its business model in the face of soft sales of personal computers. It announced Wednesday that it plans more than $2 billion in cost cuts over the next three years. It has attempted to boost both revenue and profits by acquiring higher-margin businesses, including data storage, security and networking technologies. Since 2009, the company has acquired about a dozen companies, many of which over the past year.

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