One of the most important variables income investors should consider when developing a dividend based strategy is, in my opinion, the trading of shares at or near a company's ex-dividend date. According to Investopedia, "on the ex-dividend date the person who owns the security will be awarded the payment, regardless of who currently holds the stock." After the ex-date has been declared, the stock will usually drop in price by the amount of the expected dividend. That said there are two companies that will be going ex-dividend on August 31st investors should consider.
Computer Sciences Corp. (CSC), which closed trading on Thursday at $32.00/share will be going ex-dividend at the close of trading on Friday, August 31st. The Falls Church, Virginia-based firm, currently yields 2.50% ($0.80), provides information technology (IT) and professional services to governments and commercial enterprises. The company offers IT outsourcing services that comprise operating customer's technology infrastructure, including systems analysis, applications development, network operations, end-user computing, and data center management services; business process outsourcing services; and managing transactional business functions for clients, such as procurement and supply chain, call centers and customer relationship management, credit services, claims processing, and logistics.
I think the one of the key long-term catalysts for CSC is going to be EPS trends and how they outpace some of the competition within the information technology sector. Over the last 12 months, CSC has surpassed analysts' estimates in three out of the last four quarters by an average of 44.00%, with the only misstep coming during the March 2012 quarter when CSC missed estimates by roughly 170.00% or -$0.34/share. If we examine Tech Data Corp.'s (TECD) numbers over the last 12 months, which consist of the company missing estimates in two of the last four quarters by an average of 12.80%, we'll see that CSC clearly outpaces TECD in terms of EPS trends.
Haliburton (HAL), which closed trading on Thursday at $32.72/share will be going ex-dividend at the close of trading on Friday, August 31st. The Houston, Texas-based firm, which currently yields 1.10% ($0.36), provides various products and services to the energy industry for exploring, developing, and producing oil and natural gas worldwide. It operates in two segments, Completion and Production, and Drilling and Evaluation.
One of the most important catalysts, in my opinion, for long-term investors looking to establish a position in HAL is going to be the company's margins and how they outpace some of the competition within the energy sector. Over the last 12 months HAL has demonstrated a profit margin of 10.66% and an operating margin of 17.99%, whereas Baker Hughes (BHI) had only managed to demonstrate a profit margin of 8.65% and an operating margin of 13.76%.
Potential investors looking to establish a position in either CSC or HAL should do so with a small to moderate position and add to that position as dividend and earnings announcements approach. In my opinion both companies should be considered primarily from both an income standpoint and earnings standpoint as EPS numbers have been pretty good over the last four quarters.