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As the first quarter of 2014 nears its end, several dividend stocks news items are highly likely to play a continuing role as the second quarter is set to start.
Investors will want to pay particular attention to dividend stocks news from the banking industry, as more and more banks will be announcing hikes in their current dividends. Also, with the continuing reductions to the Fed’s quantitative easing (QE) program, look for attractive entry price points on high-yield dividend stocks in established companies within their industries that will hold up against any potential forthcoming pullbacks.
Here is a recap of the biggest dividend stock news affecting the stock market right now…
The Latest Dividend Stocks News Roundup
The biggest dividend stocks news for those seeking new areas to obtain dividend yields comes from the banking sector.
The Federal Reserve released the details of their bank stress tests on March 25. Out of the 30 banks that were tested, 29 were deemed to have complied with their expected capital requirements. The only one that failed to do so was Zions Bank.
Dividend-wise, of the 29 institutions that passed the stress test, a few have already raised their dividends. For instance, Discover Financial (DFS) raised its quarterly dividend to 24 cents from 20 cents.
Under the formula used by the Fed to calculate the leverage ratio for each bank, Bank of America (BAC) was found to be carrying an excess of capital estimated to be above $13 billion. Currently, Bank of America has a mere one cent dividend. It is highly conjectured by industry analysts that BAC will raise their dividend in the very near-term. Estimates of the dividend raise are as high as ten cents.
Citigroup (C), another banking stock that currently has a one cent dividend, is also expected to raise its dividend to as high as five cents following the declaration from the Fed of its clean bill of health.
At current market prices, banking stocks have a dividend yield that does not go far above the 2% mark. For those that seek higher yielding dividend stocks, attention should be kept on such fundamental factors as decreasing sales volume.
Tobacco giant Altria was recently in dividend stocks news with plans to make its e-cigarette brand, MarkTen, into a national brand – a decision that has bolstered several analysts’ expectations for the company's revenues. While Altria has not escaped the decreasing sales volumes experienced by the entire tobacco industry, they have been able to employ a price adjustment strategy to successfully maintain consistent profit levels for the past two years.
With a $1.92 yearly dividend, at current market prices, Altria has a dividend yield above 5%.
The ability to sustain this type of yield for the remainder of 2014, and into the future, will likely be bolstered by their announced plans for MarkTen. The test marketing phase for MarkTen will conclude at the end of this quarter. Its electronic cigarette will become available nationwide staring in April or May of this year. Through the first half of March, the brand has achieved an impressive 48% market share of the e-cigarette market in Arizona, one of the two test market states.
The month of March brought with it a small pullback in equity markets, but some dividend paying stocks, such as Procter and Gamble and Coca-Cola, actually rose 2% as of March 24.
The prevailing stock news seems to be fueling a taste for the safe and secure at the expense of momentum-driven stocks. Nothing exemplifies this in March more than AT&T. With a whopping 5.4% dividend yield, this stock has risen more than 6% in the month of March alone.