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Companies without agresive dividend growth policy (July 2011)

Why company should follow the speed of Earth rotation around the sun and increase dividends each single year? When economy and business environment is not good a Board decision to keep dividends at the “old” level seems wise enough. I think it is better if company keeps dividends at the same level for relatively long time (e.g. above 1 year) than increase dividends aggressively (i.e., very often) and then drops dividends because cannot sustain new higher level.


In the past several companies froze and then increased dividends, for example (I use ex-dates as time marks and Yahoo for dividends amount /after splits/ and dates):

Arthur J Gallagher (NYSE:AIG) froze dividends from 3/27/2008 till 3/29/2011;

Ampco-Pittsburgh (NYSE:AP) froze dividends from 1/13/1999 till 4/11/2007;

Boeing (NYSE:BA) froze dividends for more than 1 year few times between 1962 and now;

BlackRock (NYSE:BLK) froze dividends from 3/5/2008 till 3/4/2010;

Cato Corp. (NYSE:CATO) froze dividends from 6/7/2007 till 6/10/2010;

CME Group (NASDAQ:CME) froze dividends from 3/6/2008 till 3/8/2011;

EQT Corporation (NYSE:EQT) froze dividends from 11/9/1993 till 2/7/2001 and froze dividends again in May 2006;

Eaton Corporation (NYSE:ETN) froze dividends from 2/1/2001 till 5/1/2003;

FirstEnergy (NYSE:FE) froze dividends between 1998 and 2005 at 37.5 cents/share and froze dividends again in February 2008 at 55 cents/share;

First Niagara Financial Group(NASDAQ:FNFG)  froze dividends from 8/6/2010 till 8/3/2007;

Home Depot (NYSE:HD) froze dividends from 39049 till 40148 12/1/2009 till 11/28/2006;

Harte-Hanks (NYSE:HHS) froze dividends from 39505 till 40513 12/1/2010 till 2/27/2008;

HNI Corp (NYSE:HNI) froze dividends from 39498 till 40598 2/24/2011 till 2/20/2008;

Hershey (NYSE:HSY) froze dividends from 8/22/2007 till 2/23/2010 and increased dividends exponentially during last 25+ years;

Molex (NASDAQ:MOLX) froze dividends between March 2000 and June 2004 at 2.5 cents/share and froze dividends again between September 2008 and September 2010 at 15.3 cents/share;

MarkWest Energy Partners (NYSE:MWE) froze dividends from 10/31/2008 till 2/3/2011;

Northwest Bancshares (NASDAQ:NWBI) froze dividends from 7/31/2007 till 2/2/2010;

Overseas Shipholding Group (NYSE:OSG) froze dividends between July 1991 and August 2003 at 15 cents/share and froze dividends again from August 2008 at 43.8 cents/share, hence their dividends grew about 3times during last 10 years;

Penn Virginia Resource Partners (NYSE:PVR) froze dividends from 11/4/2008 till 5/4/2011;

Renaissance Learning (NASDAQ:RLRN) froze dividends from 2/23/2005 till 5/9/2007 at 5 cents/share, then paid special dividend 82 cents/share in 2007, then again froze dividends till 5/5/2010 at 7 cents/share (now the company is paying dividends 8 cents/share and paid special dividend 2 $/share in November 2010);

Safety Insurance Group (NASDAQ:SAFT) froze dividends from 8/29/2007 till 8/30/2010;

SY Bancorp Inc. (NASDAQ:SYBT) froze dividends from 3/13/2008 till 12/9/2010;

Molson Coors Brewing (NYSE:TAP)  froze dividends from 2/24/2005 till 5/28/2008;

Tower Group (NASDAQ:TWGP)  froze dividends from 12/13/2004 till 9/12/2007;

United Parcel Service (NYSE:UPS)  froze dividends from 2/22/2001 till 2/20/2003;

Ventas (NYSE:VTR)  froze dividends from 3/4/2008 till 3/10/2010.;


Currently many firms (mostly banks and other financial companies) not included in David Fish CCC list freeze dividends, for example

Bank of Hawaii (NYSE:BOH) from November 2008;

Brookfield Properties Corporation (NYSE:BPO) from May 2007;

Copano Energy (NASDAQ:CPNO) from January 2009;

Courier Corporation (NASDAQ:CRRC) from November 2008;

Flushing Financial (FFIC) from March 2008;

Federated Investors (NYSE:FII) from May 2004 at 24 cents/share but paid special dividends 1.5$/share in 2010

The First Bancorp (NASDAQ:FNLC) from October 2008;

H&R Block (HRB) from December 2008;

Intersil Corporation (ISIL) from February 2008;

Lakeland Financial (LKFN) from April 2008.


Most of these firms recognized recent economy down-term and decided to keep higher cash balances than usual. I think it is the smart decision and I hope that they will increase dividends and will pay special dividend then economy improves.

Most of companies I mentioned are industry leaders and have savvy managements that drive their firms through difficult times already. Therefore I think we should recognize that some companies can be slower than other in terms of dividend growth frequency, but if expected return on investment is good a long-term dividend investor might have such “aperiodic” companies in his/her portfolio. Some of these companies paid huge special dividends during the frozen period that often over-compensated “loss” of possible steady dividend growth.

  Disclaimer: I'm long BA, BOH, HD, RLRN. I receive no compensation to write about any specific stock, sector or theme.   

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.