Legg Mason (LM) is the latest financial stock to drastically cut dividends after reporting a large fourth quarter loss for 2008. This didn’t shock anyone, as the financial sector has received a pretty bad reputation for its enormous losses and massive dividend cuts. The careful income investor who is looking for ways to generate some income from their investments should definitely look past dividend yield and instead focus on the sustainability of the payout, the dividend policy of the company and management’s desire to keep raising dividends. Some companies, whose sales are somewhat recession resistant keep generating enough cash flow to justify sharing their wealth with shareowners while also financing their operations efficiently. The bullish momentum after last weeks dividend increases from Exxon Mobil (XOM) and IBM is holding up quite well. Some solid companies such as PepsiCo and Alcon rewarded shareholders with increases in dividend income.
PepsiCo (PEP), which manufactures, markets, and sells various snacks, carbonated and non-carbonated beverages, and foods worldwide, raised its quarterly dividend by 6% to $0.45 per share. PepsiCo is a dividend aristocrat, which has rewarded its shareholders with an uninterrupted streak of increased dividends for 37 consecutive years. The stock currently yields 3.60%. Check my analysis of PepsiCo.
PepsiCo’s chairman and CEO commented on the dividend increase, which was a major confident boost for shareholders: "We are pleased to announce our thirty-seventh annual dividend increase, reflecting the strength of our cash flow and balance sheet. Even in this difficult economy, we are committed to return cash to our shareholders while continuing to invest in the long-term growth of our business."
Alcon (ACL), which engages in the development, manufacture, and marketing of pharmaceuticals, surgical equipment and devices and consumer eye care products, raised its annual dividend by 50% to $3.49 per share. Alcon is an international dividend achiever which has rewarded its shareholders with an uninterrupted streak of increased dividends for 7 consecutive years.
