Wednesday, August 12, 2009

HJ Heinz Makes a Covenant With Shareholders

HJ Heinz (HNZ) held their annual meeting in Pittsburgh and told investors how well they have been taking care of them. Chairman, President and Chief Executive Officer William R. Johnson noted that Heinz has increased its annualized dividend almost 56% from $1.08 in Fiscal 2004 to $1.68 in Fiscal 2010, Mr. Johnson added: “As Heinz moves forward, I assure you that growing your dividend remains a top priority as we are committed to returning a high percentage of earnings to our shareholders.”

Mr Johnson failed to point out that five years ago the stock was about where it is now. But having drawn the line in the sand it appears that Mr. Johnson has made a promise of income to the shareholder. This is basically a statement of strategy. The man has made a covenant with the shareholders.

The stock should be viewed through this prism?