Hewlett-Packard’s Dividend Increase
Hewlett-Packard Company (NYSE:HPQ) has announced that it will increase its total dividend payout by 10 percent. This will increase its quarterly dividend from 13.2 cents to 14.52 cents. Due to the timing of the announcement, the increase will not affect the dividend that the company is already scheduled to pay on April 3, 2013. Instead, it will take effect on the date of the company’s next regularly scheduled dividend payout. After the move, HP will yield about 2.5 percent.
SAP’s Dividend Increase
Although the move still technically requires shareholder approval, it seems certain that SAP AG (ADR) (NYSE:SAP) will increase its annual dividend by 10 euro cents to 85 euro cents per share. Due to foreign tax withholding and exchange rate issues, holders of SAP’s U.S. ADRs may receive slightly less than this amount. However, North American investors will still see a windfall from this move. SAP cited strong sales and better-than-expected revenue projections as catalysts for its move. Once the increase goes into effect, SAP AG (ADR) (NYSE:SAP) will yield about 1.2 percent.
Raytheon’s Dividend Increase
Like HP, Raytheon will increase its annual dividend by 10 percent. This translates to a quarterly dividend increase of 5 cents. According to the company’s announcement, this move will take effect at the company’s next regularly scheduled dividend payout on May 2, 2013. After the increase, Raytheon’s stock will yield nearly 4 percent.
Long-Term Outlook and Possible Plays
Each of these dividend increases is notable in its own way. For instance, Raytheon’s move comes despite lingering questions about the effects of recent U.S. defense budget cuts on the major companies that regularly contract with the military. Indeed, Raytheon’s stock fell by nearly 10 percent during recent political wrangling on the subject. However, it has since recovered much of its value and now sits near its one-year high. As such, investors seem sanguine about the potential for serious budget-related damage.
Meanwhile, Hewlett-Packard Company (NYSE:HPQ) has endured a number of setbacks in recent years. Since early 2011, the company’s shares have lost nearly half of their value. At one point, the company’s stock had suffered a two-year loss of more than 65 percent. However, HP now appears to be on the road to recovery. It is likely that this dividend increase is designed to bolster investors’ growing confidence that the company can mount a full recovery.
In sum, SAP AG (ADR) (NYSE:SAP) seems to be in a stronger financial position than either Hewlett-Packard Company (NYSE:HPQ) or Raytheon. However, there are convincing cases to be made for investing in all three of these companies. Investors who wish to profit from these recent dividend increases would do well to take a look at each firm.
The article Which Big Companies Are Increasing Dividends? originally appeared on Fool.com and is written by Mike Thiessen.
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