Dividend hounds had a few choice bones thrown their way over the past week, as several big companies announced they would be raising payouts. But the biggest dividend buzz was created by investment banking giant JPMorgan Chase (NYSE:JPM), which said Friday that fourth-quarter profit jumped 47% on improved asset quality and increased consumers and businesses lending.
JPMorgan’s high-profile chief executive, Jamie Dimon, explained it this way: “What we see is fairly broad based strength across corporate, middle market, even small business.” Dimon added, “We see the consumer is getting stronger.”
Apparently, that strength wasn’t quite enough for him to lift JPMorgan’s current dividend. Yet Dimon did give investors some clarity on this situation. In an interview with CNBC, Dimon said that the company does plan to increase its annual dividend to the range of 75 cents to $1 a share. He said that dividend hike is expected in the second quarter of 2011.
Interestingly, Dimon explained that once the Federal Reserve completes stress tests of the large U.S. banks and gives its approval, his company will then be among the first U.S. banks to increase its dividend. That would be a welcome development, as JPMorgan only pays an annual dividend of 20 cents, or a current dividend yield of 0.4%. If we do see a dividend increase from JPMorgan, it will likely mean more dividend increases throughout the financial sector — and that will be good for nearly every income hunter.
As for the prominent companies that did raise dividends this week, the list varied from a retailer to a real estate concern to a paper company, among others:
CVS Caremark (NYSE CVS). The retail drugstore operator and pharmacy-benefits manager raised its quarterly dividend to 12.5 cents from 8.75 cents, an increase of 43%. The dividend is payable Feb. 2 to shareholders of record Jan. 21. The yield based on the new payout is still a relatively low 1.42%, but the substantive percentage increase in CVS’s dividend should be seen as a bullish harbinger for things to come. In fact, CVS says it plans to increase its dividend by about 25% a year through 2015. Its goal is to pay dividends equal to 25% to 30% of its net earnings.
Epoch Holding (NASDAQ: EPHC). The company, which provides investment advisory and investment management services for retirement plans, mutual funds, endowments, foundations and high net worth individuals, raised its quarterly dividend by 20% to 6 cents. The parent of Epoch Investment Partners said the dividend is payable on Feb. 11 to shareholders of record as of Jan. 28. The yield based on the new payout is 1.6%.
International Paper (NYSE:IP). The leading worldwide producer and distributor of printing papers and packaging products raised its quarterly dividend a hefty 50% to 18.75 cents from 12.5 cents. The dividend is payable Mar. 15 to shareholders of record on Feb. 15. Yield based on the new payout is 2.7%. The increased dividend is a good sign, and it could signal a stronger-than-expected performance in the company’s upcoming fourth-quarter earnings release, scheduled for Feb. 3.
Shaw Communications (NYSE:SJR). The Canadian cable company failed to meet earnings expectations in its most recent quarter after it booked costs for the purchase of Canwest assets. However, that didn’t stop Shaw from increasing its equivalent annual dividend by 5%. The new equivalent annual dividend rate will is 92 cents on Shaw’s Class B nonvoting participating shares, and 91.75 cents per share on Shaw’s Class A participating shares. The increased payout will take effect on Mar. 30.
Vornado Realty Trust (NYSE:VNO). The trust owns a diverse group of properties, including Northeast retail properties and New York City office buildings. It also owns a stake in what could be a very hot IPO in 2011, retailer Toys “R” Us. The company lifted its annual dividend by 6%, $2.76 a share from $2.60 a share. The trust said that it will pay a quarterly dividend of 69 cents a share on Feb. 22 to shareholders of record on Jan. 28.
At the time of publication, Jim Woods held no positions in any of the stocks mentioned in this article.