By Stockpickr Staff
Posted on July 2, 2009
Some investors assume that at this time of year, it's the summer doldrums for the stock market. After all, as the saying goes: "Sell in May, go away."
But that's not really the case with dividend stocks. During the last few weeks, many major corporations have been reporting dividend raises.
Stockpickr has reviewed the recent dividend declarations and compiled a list of the top dividend-raisers for the week.
Bumping up its dividend by an amazing 25% was Darden Restaurants (DRI), which increased its quarterly dividend to 25 cents per share, up from 20 cents per share, payable on Aug. 3 to shareholders as of July 10. This gives the stock a yield of 3%.
Darden, whose restaurants include Red Lobster, Olive Garden, LongHorn Steakhouse and The Capital Grille, just announced that its earnings for the fourth quarter increased by 21%, though it expects revenue at existing locations to drop in fiscal 2010. Darden's total dividend payouts of $137 million are covered three times over by its net income of $371.8 million. The company has $1.8 billion in total debt with only $62.9 million in cash.
Darden is owned by the Fifth Third Disciplined Large Cap Value Institutional Fund, a three-star Morningstar-rated fund managed by Mary Jane Matts. The fund ranks in the top 45% of all funds in its category of large value funds for the last five years. Fifth Third also owns Unitedhealth Group (UNH), which pays a small yield of 0.1%; PG & E (PCG), with a decent yield of 4.4%; and Schering-Plough (SGP), which pays a yield of 1%.
Another recent dividend-raiser was Petsmart (PETM), which will boost its dividend by an unbelievable 233%, to 10 cents per share from 3 cents, to be reflected in the second quarter. Although the actual yield will be small at less than 2%, the percentage increase is impressive. The dividend is payable August 14 to shareholders of record as of the close of business on July 31.
In addition, the company plans to repurchase $350 million of its shares over the next two and a half years. PetSmart also announced plans to set up about 40 more stores annually in the near future.
Its total dividend payout of $50 million is very well-covered by its $472 million operating cash flow. The company is in great shape in terms of cash, with $209 million, and it has $589 million of total debt.
PetSmart shares are owned by Citadel Investment Group, a Chicago-based hedge fund with more than $25 billion under management. It was founded by billionaire trader Kenneth C. Griffin and is one of the largest hedge funds in the world. Citadel also owns Coca-Cola (KO) yielding 3.4%; Ross Stores (ROST) with a 1.1% yield; and ConocoPhillips (COP), with a 4.5% yield.
For more ideas, check out the top dividend-raisers for the week portfolio.
Author does not own any of the above.
