Four Companies Providing Major Signs of Confidence

Brian is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.

There is one fact we can’t deny: Companies that pay high yields have been rewarded in this volatile market, as investors seek safety. Furthermore, a company that returns capital to its shareholders is honored with high ratings and institutional ownership, compared to those that do not.

Below I have included four companies with what I consider to be major dividend related announcements. This includes increasing the price of dividends, special one-time dividends, and newly issued dividends. These are companies that might be attractive investments as we enter what might be a very volatile month in December.

  • Real estate company, SL Green Realty Corp (NYSE: SLG), declared on Tuesday a $0.33 quarterly dividend. The company’s prior dividend was $0.25, therefore representing an increase of 32%. The company’s current yield sits at 1.35%, but with its 32% increase, the company has a forward yield of 1.78%. The company’s ex-dividend date is Dec. 31, payable on Jan. 15. The company’s stock has recently fallen from 52-week highs over $85, currently trading at $74.00. It is a fast-growing company, but is also a bit pricey with a price/sales of 4.63.  The increase in yield might serve as an incentive to investors, that this is a strong company that cares and is willing to return more capital to its shareholders.
  • Alexandria Real Estate Equities (NYSE: ARE) currently pays its shareholders with a yield of 3.12%. But after Monday’s increase of 6%, the company’s forward yield now sits at 3.30%. The company increased its dividend by $0.03 to $0.56/share. The company’s record date is Dec. 31 and its payable date is Jan. 15. This move continues to keep ARE as one of the best yields in its industry.
  • Merck & Co. (NYSE: MRK) continues to be one of the better large cap pharma companies in the market in both returns from stock and in yield. The company has returned gains of 32.3% in the last year, yet still maintains a yield of nearly 4%, at 3.83%. The company increased its yield by 2.38% on Tuesday, making its forward yield 3.89%. This move was a bit unexpected, as the company had previously kept its quarterly dividend at $0.38 from 2004 till 2011, before increasing it to $0.42. Now, the company has once again increased the quarterly payout to $0.43, which although small, should serve as a big boost to investor sentiment.
  • McCormick & Company (NYSE: MKC) might not get the same recognition as companies such as Chipolte, Buffalo Wild Wings, or Panera Bread, but since its IPO there hasn’t been too many stocks that have traded more consistent. The company has returned gains of 36.5% over the last year, and has a yield of 1.91%. But on Tuesday it announced a 9.6% increase in its quarterly payout, from $0.31 to $0.34, and a forward yield of 2.10%. Much like the others on this list, McCormick’s decision is a big sign of confidence and should create additional support for its stock as we enter what could be a volatile month.

Any time a company raises its dividend it is a big sign of confidence and is reassuring to the market. However, now more than ever, with the fiscal cliff approaching, it’s almost shocking that companies would up the ante, especially in the cases of McCormick and SL Green. Both are companies that rely heavily on strong economic conditions and consumer sentiment for continued strength. Merck is in a business where it will grow regardless of the economy, however it did not increase its yield to the same degree. Looking ahead, investors might be looking for safe havens in the month that lies ahead, and the companies on this list might have just indirectly proved that their fundamentals, and growth, is stronger than ever, regardless of a fiscal crisis.


BrianNichols has no positions in the stocks mentioned above. The Motley Fool has no positions in the stocks mentioned above. Motley Fool newsletter services recommend McCormick & Company. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. Is this post wrong? Click here. Think you can do better? Join us and write your own!

blog comments powered by Disqus