GE holds dividend steady, analysts see December hike

GE holds dividend steady, analysts see December hike

Stock Market Predictions

(Global Markets) - General Electric Co (GE.N) said on Friday that its board voted to hold its quarterly dividend steady at 17 cents.

The largest U.S. conglomerate had raised its payout four times in 18 months, with the last hike coming in December and representing a cumulative 70 percent increase from the 10 cent per share level the company had slashed it to during the financial crisis.

The rapid pace of increases was intended as a signal that the company had regained its confidence after its GE Capital business had been hard hit by the downturn. But Chief Executive Jeff Immelt has said the Fairfield, Connecticut-based company eventually intends to return to its historical practice of raising its dividend once per year.

Analysts, on average, expect a 2-cent-per-share hike to 19 cents in the fourth quarter 2012, according to Thomson Global Markets I/B/E/S.

The company is also waiting for the Federal Reserve, which last year became GE Capital's regulator, to give it the go-ahead to resume paying a share of GE Capital's earnings back to the parent company in the form of a dividend. Analysts have said that approval could clear the way for a larger dividend increase.

GE shares currently have a dividend yield of 3.6 percent, the fifth-highest in the Dow Jones industrial average .DJI, which has a 2.6 percent average yield.

(Reporting By Scott Malone)

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McGraw-Hill, CME Group to form index JV

McGraw-Hill, CME Group to form index JV

Stock Market Predictions

(Global Markets) - McGraw-Hill Cos Inc (MHP.N) and CME Group (CME.O) will form a joint-venture to combine some of Wall Street's most well-known indicators, including the Dow Jones industrial average and the S&P 500.

McGraw-Hill, owner of the S&P Indices, said it will hold a 73 percent stake in the venture and expects the agreement to immediately add "a couple of cents" to its annual earnings.

The deal is the latest step in McGraw-Hill's restructuring of its portfolio of businesses, which also include Standard & Poor's credit ratings, other financial and market information, and textbooks for children and college students. Dissident shareholders have been pushing the company to move faster with the overhaul, charging that the mini-conglomerate has fallen short of its potential.

In September McGraw-Hill outlined plans to split into two separate publicly traded companies, one for its education business and one for its financial and markets businesses.

At the heart of the CME deal is a change in the 30-year relationship between the two companies in which McGraw-Hill has licensed its indexes to the Chicago-based operator of markets in return for per-trade fees. In the joint-venture, McGraw-Hill will take a share of profits from all of CME's stock-related products instead of collecting licensing fees.

CME Group will control 24.4 percent of the joint-venture, while Dow Jones will hold the remaining 2.6 percent stake. CME owns 90 percent of a CME Group/Dow Jones joint venture and News Corp, (NWSA.O) owner of the Dow Jones name, holds the rest.

"It is a big announcement," said Douglas Arthur, an analyst at Evercore Partners. "The index business is very lucrative, big and growing. You are taking two big players and combining them to develop more products and secure long-term relationships."

The companies said the S&P 500 stock index and the Dow Jones industrial average will continue to be maintained separately.

S&P/Dow Jones Indices will have annual revenue of more than $400 million and begin operations in the first half of 2012, the companies said in a statement.

Operating profit margins will be more than 50 percent and annual revenue will rise to more than $435 million in the first year, Terry McGraw, chief executive of McGraw-Hill, said in a conference call with analysts.

McGraw-Hill will report results from the venture as part of its consolidated financials. CME will report its stake as an equity interest. CME said that the deal will not change its 2012 earnings because the revenue it gives up to McGraw-Hill will be offset by not having to pay licensing fees.

The joint-venture will be headed by Alexander Matturri, executive managing director of S&P Indices.

For McGraw-Hill, the new venture should bring more attention from investors to its index business, which is now overshadowed by S&P credit ratings, Arthur said.

Shares of McGraw-Hill and CME were down less than 1 percent in Friday morning trading after the announcement.

McGraw-Hill was advised by BofA Merrill Lynch, Goldman Sachs and Deutsche Bank. Barclays Capital acted as exclusive financial adviser to CME Group.

(Reporting by David Henry in New York and A. Ananthalakshmi in Bangalore; Editing by Joyjeet Das, Viraj Nair and Steve Orlofsky)

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Wal-Mart raises dividend nearly 9 percent

Wal-Mart raises dividend nearly 9 percent

Stock Market Predictions

(Global Markets) - Wal-Mart Stores Inc raised its annual dividend by 8.9 percent on Thursday, as momentum in the company's key Walmart U.S. chain has rebounded.

The increased payout comes as the world's largest retailer works on balancing its need to invest in growing its business with the desire to attract shareholders who have seen Wal-Mart miss out during the broad market rally.

"Part of the reason that people own the stock is that it pays a dividend," said Consumer Edge Research analyst Faye Landes. Wal-Mart wants "to have a nice payout, but they also feel that they have other places to put their capital."

Wal-Mart said its board approved a dividend of $1.59 per share for fiscal 2013, which ends next January, up from $1.46 last year. That equates to paying about $5.52 billion to shareholders.

The family of founder Sam Walton stands to get about half of that payout, as it owns close to 50 percent of Wal-Mart's outstanding shares through various entities.

Wal-Mart has been a big buyer of its shares, spending $6.3 billion on buybacks during fiscal 2012.

Wal-Mart has raised its payout every year since it first declared a dividend of 5 cents per share in 1974. The latest increase comes after a 20.7 percent hike a year ago.

Shares of Wal-Mart, a component of the Dow Jones industrial average, were down 0.4 percent at $58.84 after rising to $59.42 earlier in the day. This year, shares of Wal-Mart fell 1.1 percent, while the Dow rose 6 percent, through February 29.

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Graphic on Wal-Mart dividend: link.reuters.com/wam86s

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"BACK ON TRACK"

Wal-Mart has high expectations for the current fiscal year, with the core Walmart U.S. business "back on track," Chief Executive Mike Duke said in a statement.

Walmart U.S. posted its second straight rise in quarterly same-store sales last week, and traffic in the stores rose for the first time after six quarterly declines.

Wal-Mart continues to invest in areas such as e-commerce, where it trails market leader Amazon.com Inc, and needs to cut costs to keep its prices low in the United States. Wal-Mart's international business is still growing and the Sam's Club warehouse chain has done well.

The dividend increase would bring Wal-Mart's dividend yield up to 2.69 percent based on Wednesday's closing price of $59.08 on the New York Stock Exchange.

While that would keep it among the middle of the pack of the 30 components of the Dow Jones industrial average, it would continue to outpace yields of some other major U.S. retailers. Target Corp's dividend yields 2.12 percent, and Macy's Inc's yields 2.1 percent.

Target, Macy's and other U.S. chains reported February sales on Thursday, and most of them did well.

Wal-Mart's new dividend level is "appropriate," for the company, which has "terrific cash flow," said Raymond James analyst Budd Bugatch.

Wal-Mart's free cash flow fell to $10.7 billion last year from $10.9 billion a year earlier, as capital expenditures outpaced its growth in net cash from operating activities.

Bugatch, who recently downgraded Wal-Mart shares to "market perform," noted that the 8.9 percent dividend increase is above the rate of earnings growth Wal-Mart forecast for the year. Wal-Mart expects earnings per share to rise about 4 percent to 8.4 percent in 2013, to $4.72 to $4.92 per share.

The dividend will be paid in quarterly installments of 39.75 cents per share, with the first payment on April 4 to shareholders of record as of March 12.

Wal-Mart said that it returned $11.3 billion to shareholders through dividends and share buybacks last year. As of January 31, it had $11.3 billion remaining under a $15 billion share repurchase plan announced in June.

(Reporting by Jessica Wohl in Chicago; Editing by Gerald E. McCormick, Dave Zimmerman)

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