Nobody forces companies to pay dividends. Investors can
hopethat the businesses they own are able to do so.
Boards of directors can
plancapital allocation decisions around assuring
there'll be enough cash lying around to make the payments.
And companies themselves can establish a reputation as good,
solid dividend paying companies.
But at the end of the day, paying dividends remains an
optional activity. If a company gets into a really tight
spot, its dividends are often among the earliest things to
get jettisoned.
Is there a problem?
That's especially true these days. The current
recession has come with an amazingly severe credit crunch. At
the worst of the crunch, it was nearly impossible for even
AAA-rated companies to borrow money affordably. When borrowed
money is
thatdifficult to come by, handing over significant
chunks of cash by making optional dividend payments may seem
a bit absurd.
Yet many companies have maintained their dividends
throughout this mess. A few -- largely those with extremely
strong financial and operational positions -- actually raised
those optional payments. For a business to be able to do that
at a time like this, when cash is so very hard to come by, is
a very clear signal of just how strong it really is.
Here are just a few companies that are members of that
elite corps:
Company
Current Yield
Recent Dividend Growth
Payout Ratio
Net Income
(in
Millions)
Cash From Operations
(in
Millions)
Chevron
(NYSE: CVX)
4.0%
8.8%
31.9%
$16,370
$20,009
Medtronic
(NYSE: MDT)
2.2%
36.4%
45.5%
$1,891
$3,703
Honeywell
(NYSE: HON)
3.3%
10.0%
37.6%
$2,273
$3,495
FPL Group
(NYSE: FPL)
3.4%
7.3%
38.6%
$1,915
$3,479
General Mills
(NYSE: GIS)
3.2% Continued... |