By Stockpickr Staff
Updated at 11:24 a.m. EDT on March 25, from March 24, 2009
What could be better than a stock that just increased its dividend? A stock that declares its first-ever dividend.
After reviewing all the dividend declarations during the last week, Stockpickr has compiled a list of the dividend-increasers as well as a first-ever dividend declaration from a major company, Oracle (ORCL).
Oracle, which was founded in 1977, declared a dividend last week for the first time of 5 cents per share, payable to shareholders of record as of April 8, with a payment due date of May 8.
The company made the decision to pay a dividend based on an increase in revenue of 2% to $5.5 billion, due to the stronger U.S. dollar. However, third-quarter earnings fell to $1.33 billion, from $1.34 billion. In addition, new software license sales dropped by 6% to $1.5 billion. Oracle's earnings guidance for the next quarter is 42 cents to 46 cents a share, compared with analyst expectations for 46 cents a share.
Oracle has more than $8 billion in operating cash flow, far more than enough to cover the new $253 million dividend payout. Although it has $11.2 billion in debt, the company almost the same amount in cash in the bank, or $10.7 billion.
In Wednesday morning trading, Oracle was up 32 cents, or 1.8%, to $18.22. It's trading in a 52-week range of $13.80 to $23.62.
One of the hedge funds that likes Oracle is Navellier & Associates, a $3.4 billion fund founded in 1980 and managed by Louis Navellier. It looks for stocks that should contribute significantly to overall portfolio outperformance against relative benchmarks. Other stocks it owns include Wal-Mart Stores (WMT), which yields 2.2%; General Mills (GIS), with a 3.6% yield; and CSX (CSX), with a 3.6% yield.
One company to raise its dividend recently was Royal Dutch Shell (RDS.A) (RDS.B), which announced a commitment to increase its first-quarter dividend by 5%, with a total dividend payout of $10 billion for 2009, up from $9.5 billion. This would give the stock a very high yield of 6.9%.
The company also announced that its total reserves as of the end of 2008 were unchanged at 11.9 billion barrels of oil equivalent. Jorma Ollila, chairman of Royal Dutch Shell, is optimistic that the global demand for energy will continue to increase once the financial crisis is over.
Shell's dividend payout is more than covered by its operating cash flow of $43.9 billion. Its cash position is $15 billion, with $23 billion in debt.
In Wednesday morning trading, Royal Dutch Shell was up $1.15, or 2.6%, at $46.17. It trades in a 52-week range of $37.16 to $87.54.
Shell is the largest shareholding of Hawkins Capital, a Houston- based hedge fund with over $500 million under management. Hawkins also owns Diageo (DEO), with a 3.8% yield; Johnson & Johnson (JNJ), also paying 3.7%; and Automatic Data Processing (ADP), with a 3.6% dividend.
For more ideas, check out the Top Dividend-Increasers portfolio on Stockpickr.
Who’s on Stockpickr Answers? Kevin Baker will be on Stockpickr Answers on March 25 to respond to investing and trading questions posed by members of the Stockpickr community. Not a member? Join the Stockpickr community today -- free.
