When a company announces an increase in their quarterly (or in some cases, monthly) dividend payout I see it as a positive catalyst for most income driven investors looking to establish a secondary revenue stream. With that said I wanted to highlight two companies who have significantly increased their dividend payouts in the last 72 hours.
Stage Stores, Inc. (SSI) announced today that it will be increasing its quarterly dividend from $0.09/share to $0.10/share. The Houston, Texas based firm currently yields 2.00% ($0.40) and operates department stores and off-price stores in the United States. It operates department stores under the Bealls, Goody's, Palais Royal, Peebles and Stage names that offer brand name and private label apparel, accessories, cosmetics, and footwear for the family. Potential investors looking to establish a position in SSI should do so from both an income and growth perspective. If we consider the company's profit (2.09%) and operating margins (3.58%) over the last 12 months potential investors will see that not only were the numbers relatively flat, but they were much better than some of the larger retailers such as J.C. Penney (JCP) which had only managed to demonstrate a negative profit margin of -3.47% and an operating margin of 0.24% over the same period.
WesBanco (WSBC) announced Thursday that it will be increasing its quarterly dividend from $0.17/share to $0.18/share. The Wheeling, West Virginia based firm currently yields 3.30% ($0.72) and operates as a holding company for WesBanco Bank, Inc. that provides retail banking, corporate banking, personal and corporate trust services, and mortgage banking and insurance services. The company offers commercial demand, individual demand, and time deposit accounts; money market accounts; savings deposits; and certificate of deposits. Potential investors looking to establish a position in WSBC should do so from both an income and growth perspective. If we consider the company's profit (23.14%) and operating margins (31.81%) over the last 12 months potential investors will see that not only were the numbers good, but they were much better than some of the larger banks such as Citigroup (C) which had only managed to demonstrate a profit margin of 16.33% and an operating margin of 21.41% over the same period.
Potential investors looking to establish a position in either SSI or WSBC should do so with a small to moderate position and add to that position as both dividend and earnings announcements approach. Both companies have demonstrated solid EPS trends over the last four quarters, and those trends should continue during the second half 2012. That said I'd keep a close eye on both companies and their margins as any increase in either profit or operating margin could equate to a pop in share price.