Dividends Upped For Companies In The Consumer Staples Sector

Despite the S&P 500 (^GSPC) rallying 27.9% from the low close on March 9th, the market is still down 44.7% from the closing high on October 9, 2007. The global economic slowdown is negatively impacting the earnings and cash flow of many companies. However, some companies still have strong cash flow, and their Boards are sufficiently confident in the future to raise dividends.

An announcement concerning an increased dividend in the current environment has positive implications for both the company’s equity and bonds. In the Consumer Staples sector, five companies have announced an increase in the quarterly dividend in the last three months.

On February 3, Avon Products, Inc. (AVP) announced a 5% increase in the dividend. The new dividend rate is $.21 per common share, a penny increase from $.20 per share. The stock currently has a yield of 3.9%.

On February 26, Colgate Palmolive Co. (CL) announced a 10% increase in the dividend. The quarterly dividend was increased from $0.40 per share to $0.44 per share. The stock currently yields 2.9%.

On February 27, Kimberly-Clark Corp. (KMB) announced a 3.4% increase in the dividend with the quarterly dividend being increased from $0.58 per share to $0.60 per share. This is the 37th consecutive year that the Board has increased has raised the dividend. The stock currently has a yield of 4.8%.

On March 26, The Pepsi Bottling Group, Inc. (PBG) announced a 6% increase in the quarterly dividend to $0.18 per share. This is the sixth consecutive year that the Board has increased the company’s dividend. Pepsi Bottling Group is the most financially leveraged company of the five with a debt/equity ratio of 4.61. The stock currently yields 2.9%.

On April 14, Proctor & Gamble Co. (PG) announced a 10% increase in the dividend. The quarterly dividend was increased from $0.40 per share to $0.44 per share. This is the 53rd consecutive fiscal year that the Board has increased the company’s dividend, and the company has been paying dividends without interruption since incorporation in 1890. Proctor & Gamble is the least financially leveraged company of the five with a debt/equity ratio of 0.67. The stock currently has a yield of 3.4%.

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