Dividend Watch: Major Dividend Hikes Continue, More Coming (CAH, CBS, CSX, PEP)

The dividend hikes continue… We have seen continued dividend hikes from large companies.  Those hiking dividends for just this trading session are Cardinal Health, Inc. (NYSE: CAH), CBS Corporation (NYSE: CBS), CSX Corp. (NYSE: CSX), and PepsiCo Inc. (NYSE: PEP).  We have broken out the yield on each, but more importantly we took a look at the estimates and payouts to see if these companies can keep raising their dividends in the years ahead.

Cardinal Health, Inc. (NYSE: CAH) provides health care products and services and it just hiked its dividend this morning.  The new payout is $0.215 per quarter or $0.86 per year.  Thomson Reuters has estimates of $2.64 EPS for fiscal June-2011 and $2.99 EPS for June-2012.  If Cardinal can come close to meeting its earnings targets, then it has plenty of room for another 10% dividend hike a year from now.

CBS Corporation (NYSE: CBS) beat earnings and revenue estimates and it doubled its dividend to $0.10 per quarter from a prior payout of $0.05.  Its new yield is about 1.5% and that $0.40 annualized payout compares to Thomson Reuters estimates of $1.56 EPS for 2011 and $1.97 EPS estimates for 2012.  It depends on whether or not CBS will need to grow cash or not, but if it lives up to estimates then it can easily boost its payout in a year.  Keep in mind that the quarterly dividend was $0.27 per quarter up until the end of 2008. Its shares were up about 4% at $26.22 on the news.

CSX Corp. (NYSE: CSX) announced a 3-for-1 stock split and boosted its dividend. The $0.36 dividend is a 38% boost and will be $0.12 per quarter after the stock split.  The rail giant also approved $2 billion for common stock buybacks. CSX noted that the payouts are up 300% and it has bought back some $5.6 billion in common stock since the start of 2006.  CSX shares are actually down almost 1% at $77.18, but the new yield on a static basis is going to be about 1.85% for new shareholders.  The new $1.44 payout compares to Thomson Reuters estimates of $5.13 EPS for 2011 and $5.96 EPS for 2012.  If the company meets targets, it can easily hike its dividend in a year.

PepsiCo Inc. (NYSE: PEP) also raised its dividend by more than 7% to an annualized rate of $2.06 versus $1.92 per share. The new $0.515 per quarter payout and a $69.80 share price will generate a dividend yield of about 2.95%.  Thomson Reuters has estimates of $4.50 EPS in 2011 and $4.91 EPS in 2012.  If it can resist making too many acquisitions, then Pepsi will have room for yet another hike a year from now.

JON C. OGG