Thursday, January 29, 2009

D&B Under Explains Dividend Increase

Dun & Bradstreet (D&B) reported some excellent numbers for 2008. This certainly makes sense as D&B sells products and solutions that help with financial due diligence. They also announced an increase in their dividend from $0.30 @ share to $0.34 @ share which represents a 13% increase. Is there cause for concern? Read this quote about the dividend from their press release

“D&B today announced that its Board of Directors has declared an increased quarterly cash dividend of $0.34 per share, up from D&B’s prior dividend payout of $0.30 per share. This quarterly cash dividend is payable on March 20, 2009, to shareholders of record at the close of business on March 6, 2009. This increase in D&B’s quarterly cash dividend is a reflection of the Company's confidence in its ability to generate continued strong free cash flow growth in 2009. “

In a tough economy this company increases their dividend telling investors they are confident about cash flow but they provide precious little qualitative information about outlooks, markets, product lines, competitive pressures. The investor is just expected to follow blindly and stay warm and fuzzy.

Dividend increases are major events. Investor behaviours are driven by dividend and yields. D&B has under-communicated in the press release.