4 Blue Chips Going Ex-Dividend On February 27

Includes: BAC, LMT, MCD, PEP
by: Snefix

Stocks go ex-dividend every day, but February 27, 2013 promises to be one of the busiest days of February, as 171 stocks will go ex-dividend. Many blue chip stocks will go ex-dividend as well. Going ex-dividend will likely increase volume as people want to get rid of their shares after they've secured their dividends, while others will want to buy shares at a marginally lower price.

The four following stocks are some of the most prominent and well-known names on the market, each offering tempting opportunities for investors. They offer varying degrees of risk and reward, balancing growth and dividends and should certainly be considered for addition to your portfolio.

McDonald's (NYSE:MCD)


(image from finance.google.com)

The fast-food behemoth will pay out a dividend of $0.77/share for the quarter (Yield 3.28%), which is a continuation of the same dividend paid out last quarter. Despite the 6% overall decline in share price from this time a year ago, the price has seen a steady climb since it increased its dividend 10% from the 70 cents it had been previously. In the last earnings call, MCD management reiterated their commitment to returning as much free cash flow as possible to shareholders. Shareholders might be happy to hear that, considering McDonald's has consistently held over $2 billion in cash-on-hand each quarter throughout 2012 and ultimately paid back $5.5 billion to shareholders for the year.

There is some pause for concern, as MCD management did express that sales globally were flat for 4Q2012. Management did attempt to assuage those concerns by expressing excitement over the Fish McBites and several other beef and chicken menu items that were being introduced in test markets.

Pepsi Co. (NYSE:PEP)

Pepsi Price

(image from finance.google.com)

The beverage super-giant is paying out a dividend of $0.5375 for the quarter (Yield 2.9%), also continuing the dividend distribution seen in the past three quarters. The share price has seen 20% growth from this time a year ago and the share price rose 4% in the past month alone. They returned $6.5 billion to shareholders in 2012 through a combination of dividends and share repurchasing. Pepsi's share price seemingly has no intention of slowing down and for good reason: in their most recent earnings call, Pepsi Co.'s management stated that they will be increasing their quarterly dividend payment by 5.6% starting in June.

The most interesting challenge expressed by management, reading between the lines in the earnings call, is the possibility that rising gasoline prices could potentially affect their sales volume. There is also the challenge of innovation in the cola flavor market, which can be prohibitively expensive and difficult as consumers want the caloric benefits of artificial sweeteners without the taste.

Lockheed-Martin (NYSE:LMT)

Lockheed-Martin Price

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Lockheed-Martin will pay out a dividend of $1.15 for the quarter (Yield: 5.2%). LMT's stock price has been a bit of a roller-coaster over the past year. This is likely in part due to the worrying of investors in regards to sequestration and the ever-conflicting news reports surrounding it. While sequestration may be uncertain, the upcoming dividend of $1.15, which is a continuation of the previous quarter's dividend, is absolutely certain. The stock price, despite the obvious ups-and-downs, is pretty much flat compared to one year ago, showing only a slim 0.27% increase. They returned $2.4 billion to shareholders in 2012, $1.4 billion through dividends and $1 billion in share buybacks.

In the latest earnings call, management announced their intentions to continue the policy of returning 50% of free cash flow to their shareholders and they expect to pay dividends of $1.5 billion in 2013.

Not all news is good for LMT, however. Management did express concerns over sequestration and that it could have a negative impact on their bottom line, although it was the uncertainty more than actual sequestration that would cause more negative effects. Additionally, quite curiously, LMT is "not assuming the effects of sequestration."

Bank of America (NYSE:BAC)

Bank of America Price

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Bank of America will be paying out a dividend of $0.01 on February 27 (Yield: 0.33%) for this quarter, just as they have done every quarter since the middle of 2009. There is something to be said for stability and predictability. Additionally, the stock price has seen a steady uphill climb since August 2012. Its price is up 52% from February of last year.

Bank of America's management has no plans to adjust the stock dividend at the present time. In the latest earnings call, they barely even acknowledged that such things exist; only mentioning dividends in conjunction with pretax losses.

Their focus is much more on earnings growth and capital growth. They're also focused on securing more market share, which they've successfully done over the past few quarters. So while the stock's price might continue to grow, the dividend probably won't rise anytime soon.


It's important to remember that stocks typically, but not always, decrease in price by around the same amount as their dividend paid out. It's also important to remember to own the stock before ex-dividend day, not on ex-dividend day, if you want to reap the yield. Of course, if you're looking for a marginally lower stock price, you should buy on ex-dividend day. February 27, 2013 is going to be a busy day, with 167 other stocks that weren't covered here going ex-dividend as well, so make the most of it.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.