The market continues its nervous trade, as jitters over the debt-ceiling drama in Washington, along with an array of mixed economic data, continues prodding both bulls and bears. Many investors are looking to earnings season to provide a sign of what’s in store for stocks over the next several months, and this week we witnessed the beginning of that season with encouraging results from Dow components Alcoa (NYSE: AA), JPMorgan Chase (NYSE: JPM) and widely held tech giant Google (NASDAQ: GOOG).
Income investors will be watching earnings season closely, as many stalwart dividend stocks are likely to increase their payouts to shareholders if earnings are sound. Well, this week, many companies decided not to wait for earnings to come out before announcing boosts to their shareholders.
Here are six companies increasing dividends this week.
A.O. Smith Corp.
A. O. Smith Corp. (NYSE: AOS), the maker of residential and commercial water heating equipment turned the heat up on its quarterly payout, raising its dividend by 14% to 16 cents per share. The company said late Monday that the new dividend will be paid on Aug. 15, to shareholders of record as of July 29.
The increased dividend may auger well for the company’s most recent earnings performance, and we’ll find out just how hot those earnings are next week, as A. O. Smith will release its second quarter financial results before the market opens on Tuesday, July 19.
Cliffs Natural Resources
Iron ore and coal miner Cliffs Natural Resources (NYSE: CLF) drilled deep into its fiscal mines and unearthed a doubling of its quarterly cash dividend. The new quarterly payout of 28 cents per share will be made on Sept. 1, to shareholders of record as of Aug. 15.
Shares of CLF surged on the dividend news, and the increased payout prompted research firm Dahlman Rose & Co. to comment, “Despite the substantial increase in the size of the cash payout, we believe that the company will have ample cash to pay down debt, further increase the dividend, or pursue acquisitions.” Dahlman Rose reiterated its “buy” rating on Cliffs shares with a $120 price target. The stock closed at $96.14 on Thursday.
Cummins Inc.
Diesel engine maker Cummins Inc. (NYSE: CMI) put the pedal to the metal on its quarterly dividend, revving up its quarterly cash dividend by 52% to 40 cents per share. The new dividend will be paid on Sept. 1, to shareholders of record as of Aug. 22.
Cummins Chairman and CEO Tim Solso said the company had its most profitable year ever last year, and he said that he expects 2011 will be better. Those bold words from Solso come as a sort of swan song, as he plans to retire after 11 years in the executive driver’s seat at Cummins. He will be replaced in January by long-time Cummins’ executive Tom Linebarger.
KLA-Tencor Corp.
Semiconductor equipment marker KLA-Tencor Corp. (NASDAQ: KLAC) announced that its board of directors has approved a 40% increase in its quarterly dividend to 35 cents from 25 cents. This increase is expected to take effect beginning with the company’s quarterly dividend to be declared in August. The upcoming increase in the quarterly payout represents the third dividend increase since KLA-Tencor first instituted its dividend in April 2005.
Shares of KLAC recently surged, after Investment Research analyst Stephen Chin raised his rating on the stock to “buy” from “neutral.” Chin also increased his target price for the stock to $49.50. The stock closed on Thursday at $40.75.
PACCAR Inc.
Diesel truck maker PACCAR Inc. (NASDAQ: PCAR) is well known for such stalwart brands as Peterbilt and Kenworth trucks, and this week the company drove up its quarterly dividend by 50% to 18 cents per share. The new dividend will be delivered on Sept. 6, to shareholders of record as of Aug. 18.
PACCAR officials said the dividend increase reflects the company’s improved financial results. In the first quarter, PACCAR saw a near tripling of earnings to $193.3 million from a year earlier, along with a revenue surge of 47% to $3.38 billion, chiefly on improvement in European and North American commercial vehicle markets.
Walgreen Co.
Drugstore operator Walgreen Co. (NYSE: WAG) said that it is raising its quarterly dividend by almost 29% to 22.5 cents per share. The new dividend will be paid Sept. 12, to shareholders of record as of Aug. 19.
In addition to the increased dosage of dividends, the drug seller’s board authorized a new $2 billion stock buyback program. The company also said it has completed the $1 billion stock buyback program it announced in October. The new $2 billion share repurchase program will expire Dec. 31, 2015.
Walgreen is the largest drugstore chain in the country, with 7,733 stores in the United States and Puerto Rico. That’s about 500 more stores than its next-largest competitor, CVS Caremark Corp. (NYSE: CVS).
At the time of publication, Jim Woods held no positions in any of the stocks mentioned in this article.
