AFLAC Increases Its Dividend

The market had a great turnaround today. The Dow broke 11,000. The S&P 500 broke 1,275 and closed up 1.00%.
Expeditors (EXPD) had a strange day. First, the stock opened 46 cents higher on its earnings news. It then fell to a loss of $1.57 a share. But the market changed its mind and decided that the earnings were good, and the stock then rallied to a gain of $2.22, an all-time high. Before the end of trading, that gain was halved and Expeditors finished with a still-impressive gain of $1.09. The stock is up nearly 14% for the year. I love this stock, but I’m afraid it’s getting a bit rich.
Donaldson (DCI) also plugged higher to a new all-time high, and SEI Investments (SEIC) is within striking distance of a new high.
After the bell, AFLAC (AFL) announced that it’s raising its dividend for the 24th straight year. That’s another reason to love this stock. The new quarterly dividend is 13 cents a share, an 18% increase over the old 11-cent dividend. The company will also buy back 30 million shares of stock.
Hewlett-Packard (HPQ) reports tomorrow. I hope this company can manage its business as well as it manages Wall Street. Investors are in love with this stock. Wall Street’s earnings consensus, so we’re told, is for 44 cents a share. Please. HPQ should easily report, I’ll say, 46 cents a share. The crowd wants permission to love the stock some more, however, I wouldn’t be surprised to see the stock pull back in the next few days.
I’m always skeptical of turnarounds. Not that companies don’t turn around. They do. But in HPQ’s case, it’s still HPQ. Once they stop improving their margins (hey, you lay off 15,000 people, your margins will improve, too), how fast can the company grow? Ten percent tops. I expect to see that sales rose about 5%, and that’s probably what they’ll do next quarter. This is not a great business to be in. There are only so many profiles you can read about CEO Mark Hurd.

Posted by on February 14th, 2006 at 8:15 pm


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