Looking Forward to More Dividend Increases Like Johnson & Johnson's

Thursday, Johnson & Johnson (JNJ) declared a 6.5% increase in its quarterly dividend rate, from $0.46/share to $0.49/share (yield: 3.6%). This follows last week’s 10% increase from the other blue-chip ampersand company Proctor & Gamble (PG).

JNJ’s CEO William C. Weldon stated, “Given our strong financial position, confidence in the future of Johnson & Johnson, and in recognition of our solid results in 2008, the Board has voted to increase the dividend for the 47th consecutive year.” JNJ is engaged in the research and development, manufacture and sale of a range of products in the healthcare field. The Company has more than 250 operating companies within three segments: Consumer, Pharmaceutical, and Medical Devices and Diagnostics. (Analysis)

Below are several other companies joining JNJ and PG in rewarding their shareholders with higher cash dividends:

• Southern Company (SO) raises annual dividend by 4.2% to $1.75/share, Yield: 5.94%
• Coach (COH) initiates $0.30/share annual dividend, Yield: 1.32%
  
• Hudson City Bancorp (HCBK) bumps its quarterly dividend to $0.15/share, Yield: 4.93%
• J. M. Smucker (SJM) boosts dividend 9.3% to $0.35/share, Yield: 3.65%

Just when it looked like the financials had got all the bad news aired, Morgan Stanley (MS) jumped in and filled the void. On Wednesday MS reduced its quarterly dividend to $0.05/share and decided to the change the company’s fiscal year end to December. The Board of Directors declared a $0.016667 dividend per common share covering the period from December 1, 2008 through December 31, 2008. The total dividend of $0.066667 per common share covering the four month period from December 1, 2008 to March 31, 2009 is payable on May 15, 2009 to shareholders of record on April 30, 2009.

It is always good to see the dividend raisers exert themselves. Hopefully this trend will continue as the fearful & fragile make way for the confident & capable. As a dividend investor, I look forward to the coming weeks. For more companies with a long string of consecutive dividend increases, see this list.

Full Disclosure: Long JNJ, PG. See a list of all my income holding here.

Comments

[a. palmer jr.:]

I'd like to see some of the others put their dividends back to where they were, especially the ones who cut their dividends because everybody else was doing it. I have about 4 of those cash-rich ones who are doing ok but reduced dividends because they could.

Apr 26 08:56 AM

[Old Trader:]

a. palmer,

I understand what you're saying, but perhaps its an act of financial prudence by the management of the companies you're referring to. Perhaps they're seeing the chance to pick up attractive assets "on the cheap" in the near future, or they're seeing areas that merit additional investment, and prefer to not burden their balance sheets with additional debt.

It MIGHT well be a case of a bit of disappoint for the moment, but additional gain a bit farther down the road.


On Apr 26 08:56 AM a. palmer jr. wrote:

> I'd like to see some of the others put their dividends back to where
> they were, especially the ones who cut their dividends because everybody
> else was doing it. I have about 4 of those cash-rich ones who are
> doing ok but reduced dividends because they could.

Apr 26 05:10 PM

[YoYoMama:]

Uhhh...BAC's dividend is a lousy 1 cent per share. Hardly "great".


On Apr 26 01:07 PM Cetin Hakimoglu wrote:

> BAC is a great dividend stock

Apr 26 05:12 PM

[Big K:]

Many companies cut their dividend to conserve cash. In most instances, this was a prudent move. So many companies have massive debt to refinance every so often. Now, they are having trouble getting their loans rolled over, and are having to come up with cash to retire it. In the long run, this should make those companies much more valuable. I fear investing in the irresponsible financial companies who gambled their shareholders money on derivative games. I don't know why the managements of all these companies, including BAC and MS have not been replaced. Forget them, buy and hold companies like KO, PG and JNJ. In 20 years you will be quite wealthy.

Apr 26 11:10 PM

[Teak:]

Yes, companies cut dividends to conserve cash. But they could also cut CEO pay, and bonus, and perqs, and etc. The shareholders of some companies are certainly taking a back seat to the empty suits that are NOT building shareholder value, rather draining shareholder value into their own bank accounts.

Time for major restructuring. CEOs should not be appointing members of the Board of Directors.

Apr 26 11:18 PM