The Weekly Dividend: Dividend Hikes and Stock Buybacks (EAT, RTN, SBUX, COP, NLY, CSCO, AAPL, WEN, NABI, RHT)

This week was another big week in the world of dividends and the quest to hike and initiate payments to shareholders.  Brinker International, Inc. (NYSE: EAT), Raytheon Co. (NYSE: RTN), and ConocoPhillips (NYSE: COP) were all among the larger companies hiking the dividend payouts this week.  We also got a dividend initiation from Starbucks Corp. (NASDAQ: SBUX), and then there was a dividend cut from Annaly Capital Management, Inc. (NYSE: NLY).  Lastly, there are two dividend to pondering for the hope of a start…. Cisco Systems, Inc. (NASDAQ: CSCO) and Apple Inc. (NASDAQ: AAPL).   On the buyback front, there were three standouts.  Wendy’s/Arby’s Group (NYSE: WEN) was the first, but then two unusual buyback announcements came from Nabi Biopharmaceuticals (NASDAQ: :NABI) and Red Hat Inc. (NYSE: RHT).

We have shown the dividend or relative buyback move for each of these stocks along with some added color on the situation.

Brinker International, Inc. (NYSE: EAT) had a triple-whammy of good news on the surface, but shares sold off on Friday.  The restaurant owner increased fiscal 2010 outlook, raised the dividend by 27% to $0.14 per quarter and authorized an additional $250 million for share repurchases on top of $60 million still available for buybacks.

Raytheon Co. (NYSE: RTN) announced Thursday that its board of directors raised its annual dividend by 21% to $1.50 per year.  The company also authorized a repurchase of up to $2 billion in stock.

Starbucks Corp. (NASDAQ: SBUX) was already expected to announce a dividend.  It did, its first ever dividend.  This will be set initially at $0.10 per quarter and the company  it would allocated 35% to 40% of net income for future dividends. It also authorized a buyback of 15 million shares.

ConocoPhillips (NYSE: COP) announced it was selling half of its Lukoil stake, is going to repurchase up to $5 billion in its common stock, and announced that it will hike its dividend to $0.55 per share per quarter from $0.50 per share per quarter.  Shares late Friday were down about 3% from when the news was announced.

Annaly Capital Management, Inc. (NYSE: NLY) cut its dividend on Monday, although the dividend on this stock has always tended to be sporadic.  The new dividend will be $0.65 per share, down from its prior dividend of $0.75.  The sporadic and irregular dividend payouts here in Annaly are due to its volatile income from mortgages as a REIT.  Shares closed out a week ago at $18.70, yet the stock was down at $17.64 late this Friday before the closing bell.

There are two solid technology companies which keep getting the dividend speculation.  These are Cisco Systems, Inc. (NASDAQ: CSCO) and Apple Inc. (NASDAQ: AAPL).

We continue to expect that a dividend in 2010 will come from Cisco Systems.  John Chambers just cannot need all that cash.  If he does not want to pay shareholders, maybe paying off debt to have an unencumbered balance sheet would improve the ratings.  Either way. we think something on this front is coming this year.  The buyback model is just not enough.

Wendy’s/Arby’s Group (NYSE: WEN) announced this Monday that it was increasing buyback plan by $50 million to $250 million.  We saw that the repurchase plan would stay in effect until January 2, 2010.

Nabi Biopharmaceuticals (NASDAQ: :NABI) was one of the less common biotech stock buybacks announced.  Early this week, its board approved an aggregate total of up to $60.9 million in share buybacks, although this includes the $10.9 million balance remaining from a 2007 plan to repurchase up to $65 million in stocks.  Nabi has already repurchased 13.9 million shares for a total of $54.1 million.  And to boot, there was a hint that more buybacks may be coming pending milestones and expense clarification.  The market cap here is listed as $281 million.

Red Hat Inc. (NYSE: RHT) was even more unusual than Nabi’s buyback.  The Linux software player said that it authorized the repurchase of up to $300 million of common stock, which is meant to replace a prior $250 million plan where the last $10 million was completed this month.  Maybe technology companies have to do this just to offset employee stock option dilution, but we see very little benefit in companies with high-beta and high-multiple stocks spending cash just to repurchase their own shares.  The market cap here is over $5.3 billion and shares look down 6% or more since its disappointing outlook on the deferred revenues.

As far as Apple, we still think a dividend could be paid out.  But who cares what we think here.  Steve Jobs has already panned the notion.  Do you trust pundits from the sideline, or the most famous CEO of the world today?

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JON C. OGG