A major cut by a dividend champion and 3 must know hikes
TDS cuts dividend after 50 years and nice hikes by LyondellBasell, Ralph Lauren and Hamilton Lane
In a big week headlined by the 150% dividend increase from Nvidia (NVDA) we look at four other US listed stocks that announced surprising or impressive dividend actions. We have one major dividend cut and three nice hikes.
TDS sees 50 year streak coming to an end….
A big shock this week came from Telephone and Data Systems (TDS) with a 78.9% dividend cut to 4 cents quarterly per share. This ends a whopping 50 consecutive years of increased dividends by TDS. The crazy thing is that TDS had announced a 2.7% hike earlier in 2024, marking the milestone 50 years of increased payments to shareholders. The cut is explained by TDS:
“TDS remains confident in its plans to drive growth and create value by investing in fiber expansion. To support those plans, TDS is resetting its approach to capital allocation. Specifically, the Board has declared dividends for the second quarter 2024 at approximately 20% of the previous level for its Common Shares and Series A shares. This shift in approach is expected to free up additional capital that can be used to support the company's fiber program, among other purposes.”
Telephone and Data Systems, Inc. (TDS) is a telecommunications company founded in 1969, originally serving as a rural telephone service in Wisconsin. It has grown into a holding company for over 90 small rural telephone companies, offering wireless, broadband, TV, and voice services to around 6 million customers in the U.S. The company’s founder, LeRoy T. Carlson, passed away in 2016 at the age of 100.
The 5 year CAGR for the TDS dividend was small with just 2.7% after the latest dividend hike earlier this year. This 5 year CAGR will now drop to -24.7%. Ouch……
LYONDELL BASELL: a nice hike and a big yield
Lyondell Basell Industries (LYB) continues to impress with nice annual dividend hikes. This year’s dividend will be raised by 7.2% to $1.34 quarterly, marking the 14th consecutive year of increases for the chemicals company. LyondellBasell is also known for its regular special dividend payments with a $5.20 per share extra dividend last paid in june 2022. The regular dividend yields 5.4% at a stock price of $98.71.
HAMILTON LANE: DOUBLE DIGIT STREAK
Also impressing is Hamilton Lane (HLNE) with a new double digit hike of 10.1% to $0.49 quarterly. This marks the 7th consecutive year with a dividend hike in double digits. The current yield for HLNE is 1.5% with the stock up 15.1% YTD at $130 as of May 29, 2024. The 5 year CAGR for the Hamilton Lane dividend is 12.2% with the company now paying about $106 million in dividends annually to shareholders.
RALPH LAUREN: Record high dividend
Finally another nice dividend hike of 10% was announced by Ralp Lauren Corp (RL), bringing the quarterly payment to a new record high of 82.5 cents per share. The company did however suspend its dividend in 2020 because of the covid-pandemic. So in fact this only marks the 3rd consecutive year of increased dividends by RL. The luxury products maker now has a dividend yield of 1.8% at a stock price of $181.25. The stock has gained 26% YTD leaving RL with a $11.3 billion market cap.
Analysts expect a low single digit revenue growth for RL the next couple of years. The company has a strong balance sheet with a net cash position and sports an estimated p/e of 16 for 2024 with an expected ebit-margin of more than 13% and a ROIC (Return on Invested Capital) of 19.4% for 2023.
Disclaimer: The information provided here is for informational purposes only and should not be considered financial advice. Investors should conduct their own research or consult with a financial advisor before making any investment decisions.