Apple Inc. (AAPL), Corning Incorporated (GLW) & Two Massive Dividend Hikes

Another dividend hike for Corning

Corning Incorporated (NYSE:GLW) raised its dividend by 20% less than a year ago and has now raised it again, this time by 11%, to $0.10 quarterly. This puts the new dividend yield at around 2.9%. At the same time the company announced a new $2 billion share repurchase plan. With a market cap around $20 billion this plan could potentially buy back about 10% of the company.

In the first quarter GAAP sales were down 6% but EPS was up 6%. On a non-GAAP basis, which excludes the impact of the yen-to-US-dollar exchange rate and other special items, EPS actually rose by 15% on flat sales. Free cash flow was a strong $429 million, up from the same period last year due to lower capital expenditures. The total annual dividend payment will be around $600 million, neglecting the effect of further buybacks, and based on last year’s numbers this is about 35% of the net income.

Corning Incorporated (NYSE:GLW) has about $5.7 billion in cash on the books along with $2.9 billion in debt, so the balance sheet can easily support the buyback program. The LCD glass business appears to be stabilizing, so the years of EPS declines for Corning Incorporated (NYSE:GLW) are hopefully over. The company has been working to diversify its revenue stream, but much of the company’s profits still come from its LCD glass business.

I expect that the dividend will grow quickly from here, and with two dividend increases less than a year apart the company seems committed to returning profits to shareholders. Before the stock price rose on earnings the dividend yield would have been above 3%, but the rising stock price pushed the yield back down. The yield-on-cost for the Corning Incorporated (NYSE:GLW) position in The Ultimate Dividend Growth Portfolio is now about 3.09%.

How this changes things

These two dividend increases have increased the projected annual dividend income for The Ultimate Dividend Growth Portfolio by about 1%. This may not seem like much but all of these small changes will add up over time. You can track the current state of portfolio by going here. And here’s a graphic showing what the portfolio looks like today.

The article 2 Big Dividend Hikes originally appeared on Fool.com.

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