matisse capital management

Ten Companies Raising Dividends

This week brings the release of new data that can move the market: GDP (left) and Consumer Confidence on Tuesday, and Durable Goods Orders and Jobless Claims on Thursday.  And while it seems that companies have been cutting dividends right and left lately, here are 10 companies that are increasing their dividends.  All numbers are quarterly unless otherwise noted. (disclosure:  the author is long EMR).

   EMR, Emerson Electric Co. - from $0.30 to $0.33 per share

   GDSZF.PK, GDF Suez - per CEO, dividend will be increased 10-15%

   NKE, Nike Inc. - from $0.23 to $0.25 per share

   NST, NSTAR - from $0.35 to $0.375 per share

   PEBO, People's Bancorp, Inc. - from $0.22 to $0.23 per share

   ROP, Roper Industries - from $0.0725 to $0.0825 per share

   SJI, South Jersey Industries - from $0.27 to $0.2975 per share

   SYY, Sysco Corporation - from $0.22 to $0.24 per share

   THFF, First Financial Corp. - from $0.44 to $0.45 per share (semi-annually)

   UBCP, United Bancorp, Inc. - from $0.13 to $0.135 per share

Dividend Slashers - 11/22

The following companies recently announced a cut to their quarterly dividend:

   ASH, Ashland, Inc. - from $0.275 to $0.075 per share

   CUZ, Cousins Properties Incorporated - from $0.37 to $0.25 per share

   EXP, Eagle Materials, Inc. - from $0.20 to $0.10 per share

   FISI, Financial Institutions, Inc - from $0.15 to $0.10 per share

   KEY, KeyCorp Bank - from $0.1875 per share to $0.0625 per share

   NM, Navios Maritime Holdings Inc. - from $0.09 to $0.06 (Q4 and forward)

   NYT, The New York Times Company - from $0.23 to $0.06 per share

Around the World - Economic News

At the end of the day, November 20, the Dow Jones Industrial Average (DJI) was down 445 points. 

In a market that has experienced significant volatility, generally due to a lack of trading volume, Thursday was marked by unusually heavy volume.  Needless to say, this was predominantly sellers; many of the stocks I follow had volumes that were 15-30% above their average day.  I suspect this is due mostly to institutions trying to raise capital, in any way possible, and mutual funds selling shares as customers withdraw funds.  Other news from around the world follows:

Citigroup (C) loses half its value in 3 days: Financial Times

Is the crisis is over for Canada's banks? Globe and Mail

Is it time to go long on stocks?  Economist

US deflation, the Fed's new challenge: Financial Times

  Bank and hedge fund selling driving volatility: Economist

Swiss central bank cuts rate 1.0%: Financial Times

Potential takeover targets: Globe and Mail

No auto bailout GM, F, Chrysler: New York Times

General Motors Financial (GMAC) wants bank bailout: New York Times

BASF Chemical closing 80 plants: New York Times

Iceland gets IMF bailout, re-floats currency: Financial Times

Are we headed for 1930's-style deflation? Economist

"Citigroup's problems run deep:" Economist

Mutual funds have record outflow in Oct., reverse in Nov.: Barrons

Five stocks with significant cash reserves: Barrons

Is Japan's lost decade our future? Globe and Mail

How low can the Dow go?  It's anybody's guess.  However, a chart of the Nikkei, left, since 1980 is instructive as to what is possible.  Other bear markets in the 20th century had the following impact on the Dow:  1929-32: -89.2%; 1937-38: -49.3%; 1940-42: -32.7%; 1961-62: -27.1%; 1973-75: -45.1%.   And recently, T. Rowe Price compiled some data on this topic: since 1945, recessions lasted on average 10 months; from the market peak to the bear market low, the S&P 500 large cap stocks fell an average of 23.6% (we have already exceeded this); and the market usually begins rising half way through a recession with the S&P 500 up 24% on average six months after the market started rising.

Dividend Slashers and Dividend Growers - 11/14

The following companies have announced cuts to their dividends:

   ACAS, American Capital Ltd. - from $1.05 quarterly to suspended (rest of 2008)

   CRYP, CryptoLogic Limited - from $0.12 to $0.03 per share, quarterly

   IMN, Imation Corp. - from $0.16 to $0.08 per share, quarterly

   KFN, KKR Financial Holdings, LLC - from $0.40 quarterly to suspended

   NBD.TO, Norbord, Inc. - from $0.10 to suspended

   PLD, ProLogis - from $0.57 to $0.25 per share, quarterly

   PRU, Prudential Financial - from $1.15 to $0.58, annually

   TCK, Teck Cominco Ltd. - from $0.50 semi-annually to suspended

The following company has announced an increase in its dividend:

   PEBO, People's Bancorp Inc. - from $0.22 to $0.23 per quarter

Dividend Slashers and Dividend Growers - 11/7

Below are companies that are cutting their quarterly dividend:

  ABCW, Anchor Bancorp Wisconsin Inc. - from $0.10 to $0.01 per share

  GNW, Genworth Financial Inc. - from $0.10 to suspended

  KBH, KB Home - from $0.25 to $0.0625

  MIC, Macquarie infrastructure Company, LLC - from $0.645 to $0.20

  NFP, National Financial Partners - from $0.21 to suspended

  PCAP, Patriot Capital Funding Inc. - from $0.33 to $0.25

  SPP, E. W. Scripps - from $0.15 to suspended

Below are a few companies that are raising their quarterly dividend payouts:

  EMR, Emerson Electric Co. - from $0.30 to $0.33 per share

  RNT, Aaron Rents Inc, SC - from $0.16 to $0.17 per share

Disclosure:  The author is long EMR.

Global Markets With the Lowest P/E Ratios

As of October 31, these were the 10 global markets with the lowest P/E ratios, according to the Financial Times.  I have also included tickers for NYSE-listed ADRs from these markets, if there were any:

  1. Cyprus, 3.7 x

  2. Ireland, 4.6 x    (AIB, FLY, CRH, ELN, GLS, IRE)

  3. Netherlands, 4.7 x  (ENL, RDS.A, PHG, UN, AEG, CNH, CLB, IND)

  4. Norway, 5.0 x   (STO)

  5. Romania, 5.0 x  

Negative Real Interest Rates and the Fed

 The Fed cut the federal funds rate by 50 basis points last week, to 1.0%.  In doing so, Bernanke has taken the rate right back to 2003 levels, when Greenspan also had the rate at 1.0%.  Unfortunately, the Consumer price Index data released in September showed year over year inflation of 4.9%.  This means that real interest rates are negative at the present time, and that was exactly what created the commodities and property boom and bust of 2003-7.  This approach is a return to the status quo of the last few years and like trying to cure a hangover with another drink.  So why does it matter if real rates are negative?