U.S. Corporations Flaunting Their Balance Sheets With Dividend Hikes

A lot of major U.S. companies have just announced dividend hikes, thus we’re seeing some signs of balance sheet confidence.

Recent dividend increases via 24/7 Wall St.:

  • Archer Daniels Midland Company (ADM)
  • Boardwalk Pipeline Partners (BWP)
  • Colgate-Palmolive (CL)
  • Hasbro (HAS)
  • Hershey (HSY)
  • L-3 Communications (LLL)
  • Time Warner (TWX)

Some relatively strong, defensive companies offer yields approaching U.S. treasuries even.

Colgate and Hershey’s look particularly interesting to us. We feel such the combination of decent dividend yield and recession-resistant business fits well with a sluggish-U.S.-rebound scenario. Though everyone should do their own due diligence.

24/7 Wall St: Colgate-Palmolive Co. (NYSE: CL) is an easy dividend hike because its consumer products make it close to recession-proof. The surprise wasn’t that a dividend hike came, it was by how much. The bump was 20% to $0.53 per quarter. We have over a decade of dividend hikes here and this is actually not the highest payout raise on a percentage basis from the company. Also announced was a 40 million share buyback plan, which comes to about 8% of the outstanding shares. The new yield is 2.67% and at $79.26 it has a 52-week trading range of $54.51 to $87.39.

Hershey Co. (NYSE: HSY) may have been an obvious dividend hike. After all the noise that was being made over whether it would or could participate in a Cadbury-Kraft deal and after being classified as a dead money stock for years this just made sense. This brings up the issue that the company might not be about to pounce on another opportunity despite the company’s intention of looking for mergers. Its quarterly dividend will now be $0.32 per quarter for a 3.45% (3.427% actually). It had paid $0.298 per quarter over the last 10 quarters. At $37.35, its 52-week trading range is $30.27 to $42.25. Five years ago this was a $60 stock.

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The author may have exposure to Colgate and Hershey through a fund.

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