Dividend Increases and Buybacks: WMT, CAH, and UHT

Companies have several means through which they share their prosperity with shareholders. Dividends are the portion of corporate profits paid out to stockholders in the form of cash. Share buybacks on the other hand distributes cash to existing shareholders in exchange for a fraction of the company’s outstanding equity. While both methods have their pros and cons, when used carefully, they could strongly add to the total returns of long-term shareholders.

Several companies announced plans to return billions of dollars to shareholders either through stock buybacks or dividend increases;

Wal-Mart Stores, Inc. (WMT), which operates retails store in various formats worldwide, approved a new share repurchase program that gives the company authorization to repurchase $15 billion of its shares. That’s after having repurchased $11.5 billion in stock over the past two years. If all the stock were bought at the current prices, the company would be able to retire about 7.5% of its outstanding common stock.

Wal-Mart Stores, Inc. is a dividend aristocrat, which has increased its quarterly dividend in each of the past thirty-five years. The company raised its quarterly dividend by 15% in early march to 0.273/share. The stock currently yields 2.10%.
Despite the fact that I am bullish on the stock, I would still need an initial yield of 3% before I could add to my position there. Wal-Mart has been flat for over a decade now, where any returns were achieved exclusively through dividend reinvestment. If the stock price remained where it’s at for another decade, I would like to at least get some decent return in the form of at least a somewhat decent dividend yield. Currently there are many other dividend growth stocks that yield more than 3%, which still have the same growth characteristics as the Bentonville, AR based retailer.

Cardinal Health (CAH), which provides products and services to the healthcare sector in the United States, announced a 25% increase in its quarterly dividend to $0.175/share. Cardinal Health is a dividend achiever, which has increased its quarterly dividend for twenty consecutive years. The dividend has increased over 11 times over the past decade. The company's focus on dividend expansion creates a predictable and disciplined use of cash to drive shareholder returns and signals confidence and strength in the cash generated by its businesses. The stock currently yields 2.30%. I would be interested in acquiring shares in this global healthcare provider on dips below $24.

Universal Health Realty Income Trust (UHT), which invests in health care and human service related facilities, increased its quarterly dividend to 59.50 cents per share. Universal Health Realty Income Trust is a dividend achiever, which has increased its quarterly dividend in each of the past twenty-one years. The stock currently yields 7.00%.

As usual, scanning the wires for dividend increases or any dividend news whatsoever is only the beginning in the process of sifting through many stocks, before identifying the best dividend stocks to own for the long run.

Disclosure: Long WMT

Comments

[Larry House:]

I bought some WMT last week. While other corporate giants are in decline, WMT is still going strong and is worth of more respect than it gets.

Jun 09 03:35 PM

[madmilker:]

People in America need to realize jus what got America in this shape…”cheap” yes so-call cheap items from a foreign land.

quote*Wal-Mart firmly believes in local procurement. We recognize that by purchasing quality products, we can generate more job opportunities, support local manufacturing and boost economic development. Over 95% of the merchandise in our stores in China is sourced locally. We have established partnerships with nearly 20,000 suppliers in China. *end quote!

Now! if there be 182 country’s making items for the world to buy and they have only 5% of the pie in China…duh! This company makes the nice people of China support their currency(yuan) by keeping it in their country working for the people there…. but with the “yuan” going up in value and the US dollar going down…all the foreign items that the American consumer buys thinking it is cheap has went up in price.

People…its all about the currency and to keep a currency strong you got to keep it floating around the country you live in so it can work for you. For the past 12 years all them US dollars are being shipped overseas to a foreign bank and with the American worker not making anything for the foreigner to buy the “we the people” have to turn to the “second” largest employer in America(Uncle Sam) to sell “we the people” debt in order to get all them dollars back!

50 years ago a foreigner would had given their left nut for a US dollar or a Hershey’s chocolate bar and today the same foreigner has got Uncle Sam and the American consumer by both all the while Hershey is moving the chocolate factory to Mexico. Wake up! America and think “MADE IN AMERICA.”

quote*"Considering that there are over 30,000 ships at sea this morning," writes James Carlton, director of the Williams College-Mystic Seaport Maritime Studies Program, in an e-mail, "the total number of organisms and species in this global 'bioflow' on the morning your readers read your piece could be staggering - billions of individuals, and thousands of species."

Indeed, scientists have long considered ballast water the primary way invasive aquatic organisms are introduced. From the zebra mussel's arrival in the Great Lakes, to an American jellyfish severely disrupting Black Sea fisheries, the potential costs of accidental introduction of a species to new homes can be tremendous. Aquatic invasives cost the US $9 billion yearly, according to estimates by David Pimentel, professor emeritus of ecology and evolutionary biology at Cornell University in Ithaca, N.Y. Zebra and quagga mussels (a cousin to the zebra) alone cost the $1 billion annually.*end quote!

tat is $9 billion a year in hidden taxes to all Americans...
cheap ain't chic and it cost America............jobs!

Jun 10 12:25 PM