According to Standard & Poor's, in the second quarter of this year, there were more cutbacks in dividend payouts than there were for any other quarter in the last 20 years, with 17 of 20 financial stocks in the S&P 500 cutting their payouts during this year.
Companies such as Citigroup (C), Wachovia (WB). National City (NCC) and Washington Mutual (WM) have slashed their dividends, and Grubb & Ellis (GBE) has suspended its dividend.
When stocks raise their dividend during this turmoil, it usually means the company is doing extremely well. Stockpickr has compiled a list of the stocks that increased their dividends last week.
The stock with the biggest dividend increase last week was Cummins (CMI), which boosted its quarterly dividend by an amazing 40%. The manufacturer of diesel and natural gas engines and electric power generation systems just announced that it is partnering with another Indiana based company, Eli Lilly (LLY), to help minority-owned businesses at Indiana Black Expo's Summer Celebration.
It also announced the release of Fleetguard ES Compleat Glycerin, an environmentally friendly heavy-duty engine antifreeze/coolant using nontoxic glycerin. The stock has a P/E of 17 and a PEG of 0.68, and it pays a yield of 1.1%.
Cummins is also owned by the Hancock Horizon Value Trust, a Morningstar-rated five-star fund managed by David Lundgren. The fund has had an average annual return of 18.35% over the last five years. Hancock also owns Precision Castparts (PCP), with a yield of 0.1%; Nucor (NUE), with a 1.9% yield; and Alcoa (AA), with a 2% yield.
Another stock which increased its dividend is Walgreen (WAG), one of the two largest drug store companies in the U.S., with over 6,700 locations. It bumped up its quarterly dividend by 18.4%. Coverage was just initiated on the company by Jefferies, which gave it a hold. Moody's cut its long-term bond rating to A1 from Aa3. The stock has a P/E of 15, a PEG of 1.05 and a yield of 1.4%.
Walgreen is owned by David Einhorn's Greenlight Capital , a hedge fund that specializes in spinoff situations. It has had annualized returns of 27% for the last 10 years. Greenlight also owns Ameriprise Financial (AMP), with a 1.5% yield; Target (TGT), with a 1.4% yield; and Covidien (COV), with a 1.3% yield.
CVS Caremark (CVS), the other of the two largest drug store companies, is another dividend increaser, raising its dividend by 15% to 6.9 cents per quarter. Jefferies just initiated coverage and gave it a buy rating. The stock has a P/E of 20, a PEG of 0.99 and a yield of 0.7%.
CVS is favored by the noted trader, Leon Cooperman, founder of the New York City-based $4.5 billion hedge fund Omega Advisors. Cooperman also owns Atlas America (ATLS), with a yield of 0.3%; Koninklijke Philips Electronics (PHG), with a yield of 2.8%; and 3M (MMM), with a 2.9% yield.
To see the entire list of stocks that increased their dividends last week, check out the Dividend Raisers for the Week portfolio at Stockpickr.com.
