Monday, February 01, 2010

Church & Dwight Confused Dividend Signal

Church & Dwight (CHD) the Arm & Hammer guys declared a dividend and announced that they would report to investors on how they did it nine days from now. They also touted their horn and reminded the market that this is the 436th consecutive dividend. The stock yields less than one percent so there are not too many investors living off this income stream.

Last time they did this on Oct 30, 2009 the stock popped a bit and trading was way over the daily average. This time the stock has dropped on an up market trend and volume seems way under the daily average. Although end of month January volume spiked.

Have they overused the dividend signal? Consecutive dividends are nice but management needs to explain how they earned the dividend. Dessert first is a short term communications strategy that some investors will see through.

The conference call is scheduled for 12:30ET on Feb 9, 2010. The dividend is declared for holders of record and the close of business for Feb 10, 2010. So if there is bad news or something not to the markets liking you have 1.5 trading sessions to make decisions knowing that the valuation will carry a declared dividend until March 1, 2010. A three week hang time.

Hmmm. Hmmm again.