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sagitarius84 (< 20)

Avery Dennison Cuts Dividends

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July 31, 2009 – Comments (3) | RELATED TICKERS: JNJ , AVY , XOM

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Avery Dennison (AVY) just declared a quarterly dividend of 0.20/share, which represents a 50% decrease from last quarter’s payment of 0.41/share. The company reduced its dividend to support debt reduction efforts. The company also reported $0.56 in 2Q earnings per share, which didn’t provide sufficient coverage for the dividend. In a previous article I outlined Avery as one of the companies whose dividend are at risk. Avery Dennison has been unable to cover its dividend payment over the past several quarters.

"The possibility of continued poor market conditions beyond 2009, along with increased pension funding requirements, compels us to take precautionary action," CEO Dean A. Scarborough said.
"The size of the dividend reduction reflects a combination of the company's near-term debt reduction target, as well as our target to pay a cash dividend of 40 to 50 percent of normalized earnings over time," he said, adding that when the company's outlook improves, it expects to raise its dividend."
( source)

This dividend cut ended Avery Dennison’s 32-year streak of consecutive annual dividend increases for this dividend aristocrat. The company last raised its distributions in December 2007. I didn’t own any stock in Avery, but If I did I would have sold it immediately after the news.

Avery Dennison Corporation (AVY) is engaged in the production of pressure-sensitive materials, office products and a variety of tickets, tags, labels and other converted products. The Company's segments are Pressure-sensitive Materials, Retail Information Services and Office and Consumer Products.

In contrast, there were 28 dividend increases in the elite dividend index so far in 2009. The companies raising distributions this year include:

 

To open the spreadsheet in a new window, check here.

This marks the 8th dividend cut in the Dividend Aristocrats index so far in 2009. The other dividend cutters include: ( LINK TO TABLE)

 One company, Rohm & Haas was taken over by Dow Chemical (DOW) in the first half of 2009.

Full Disclosure: I have positions in most of the stocks mentioned above

Relevant Articles:

- Dividend Aristocrats keep raising their dividends
- Why do I like Dividend Aristocrats?
- When to sell my dividend stocks?

- High-Yield Dividends at Risk 

3 Comments – Post Your Own

#1) On July 31, 2009 at 9:25 AM, sagitarius84 (< 20) wrote:

What is your opinion on dividend investing?

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#2) On July 31, 2009 at 10:29 AM, dudemonkey (40.80) wrote:

What is your opinion on dividend investing?

I've recently become interested in dividend investing.  When stock prices are irrationally low I am still loading up on undervalued "growth" stocks (like Netflix or Marvel), but when I have cash to invest and I'm not finding any significantly undervalued stocks I'm starting to turn increasingly to dividend stocks.  I like this strategy as, ultimately, I hope to live on the income produced from my portfolio.

Also, I'm finding some big dividend-producing stocks that are trading at SIGNIFICANT discounts to their intrinsic value and I haven't hesitated to load up on them.

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#3) On July 31, 2009 at 10:36 AM, lemoneater (78.93) wrote:

I'm an avid dividend investor, but I do have a few non-dividend stocks like ISRG and PANL which earn their keep in other ways:) Since I'm interested in tech, I'm glad that some semi-conductor stocks do have dividends like XLNX and TSM. If there are two stocks in a sector that interests me, and one has a dividend and the other doesn't unless I know of a compelling reason not to I almost alway pick the stock with a dividend. I'm not a millionaire so I need a practical way to keep affording my investing hobby.

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