The season for reporting second quarter earnings is warming up. I hope to see somewhat better picture of the state-of-economy and who is coming out with flying colors. I am following few selected ones based on my holdings and/or my potential opportunities.

McDonalds Corporation ( ): The 2Q09 earning per share was $0.98 (vs. $0.87 in 1Q09).

• The key highlight was reduced overall profits on y-o-y basis (vs. $1.04 in 1Q08) due to fluctuations of exchange rates.
• Quarterly dividend of $0.50/share is well covered with earnings. The quarterly payout ratio is 51%.

3M Company ( ): The 2Q09 earning per share was $1.12 (vs. $0.74 in 1Q09).

• The key highlights were increased EPS, reduced overall income, and reduced revenue.
• Increased EPS seems to be due to controlled operating expenses.
• Quarterly dividend of $0.51/share is well covered with earnings. The quarterly payout ratio is 45%.

AT&T Inc. ( ): The 2Q09 earning per share was $0.54 (vs. $0.53 in 1Q09).

• The key highlights were reduced overall profits on y-o-y basis (vs. 0.63 in 1Q08) and reduced revenue.
• Quarterly dividend of $0.41/share is barely covered with earnings. The quarterly payout ratio is close to 76%.
• The payout ratios have increasing trends. Is this a warning sign?

United Parcel Service Inc. ( ): The 2Q09 earning per share was $0.44 (vs. $0.40 in 1Q09).

• The key highlights were reduced overall profits on y-o-y basis (vs. 0.85 in 1Q08) and reduced revenue.
• Quarterly dividend of $0.45/share is not covered with these earnings. The quarterly payout ratio is more than 100%.
• The quarterly payout ratios have been above 100% for two quarter in a row now.
• Expect dividend cuts for UPS.

MCD and MMM continue to show strengths in their ability to manage during the downturn. Would you be investing in them?