Dividend Increase: Dow Chemical (DOW)

DOW Chemical announced a dividend increase of $0.04 per share, boosting their dividend from $0.42 to a new amount of $0.46 per share quarterly, a 9.5% bump.  DOW has a mixed history on their dividend payments.  Their history of dividend payments can be traced back to 1900, however they have had the occasional cut to their dividend, most recently back in 2009.  DOW has a short recent streak of boosting their dividend only going back to 2011.  While the rate of the increased dividends has recently been impressive, I’d personally prefer a more conservative dividend growth rate from these guys to give a degree of cushion when times get a little tough.

Earnings have recently been pretty impressive regardless, I would just like more predictability in my income.  The chemicals area became a little interesting of the summer as attention was drawn to competitor DuPont (DD) from an “activist” investor calling for a spin off of what is now DD and Chemcours (CC).  Pretty sure the activist investor was just trying to draw attention to DD stock for a short term pop in the price, as both DD and CC have tanked after the hype subsided.

My interest in DOW purely came a few years back as a value play.  The company struggled, dropped into the teens, I bought and sat on it.  As far as a dividend growth play, they should be able to increase their dividend in the shorter term, but the next slow down in sales, I wouldn’t be surprised to see a dividend cut.  So DOW is far from being a favorite dividend growth stock.  I wouldn’t even included it in the same company as JNJ, KO, or MO with regards to dividend investing.

Sometimes you just enter a position in a stock, because it had a massive drop and you don’t think it will go out of business and eventually bounce back.


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