Thursday, February 12, 2009

Dow Chemical has first dividend cut in company's history.

Since 1912, Dow Chemical has paid a dividend every quarter. The dividend had increased every year until today. The dividend is being cut however and not eliminated. The dividend goes from $0.42 to $0.15. The $0.60 still represents a 6% yield on $10 shares. The company has battled with the struggling economy. Shares have traded as high as $43.43 in the past fifty two weeks. Shares have tumbled straight down with no real bounce backs.

The company had previously had an agreement to acquire Rohm & Haas in a $15 billion deal. The financing that Dow was going to receive fell through.

The 64% dividend cut will save the company $1 billion annually. This is a much needed move. The dividend will still be 6% for those who hold onto it. Shares should be trading closer to $15 which would drop the yield down to 4-5%.

I would hold the stock and look for any drops to $9 and buy aggressively.

1 comment:

  1. Good article and very valuable information. Keep it up!