February 19, 2009

CNH board recommends suspending stock dividend

Despite having a good year in 2008, in terms of both sales and profitability, the board of directors of CNH have recommended that the company suspend payment of its annual cash dividend in 2009.

The 50-cent dividend is usually paid to stockholders in April or May.

The board said it believes "that in these times of economic turbulence the Company should conserve cash, while maintaining a prudent level of industrial investment." The Board's recommendation is subject to the approval of shareholders at their annual general meeting scheduled for March 20, 2009. With 237 million shares of stock, the suspension would conserve $118 million.

If the company ignores the directive, the 50-cent payment would be especially rich -- a yield of 6.6% at the stock's currently depressed price per share of $7.49. Last year's 50-cent dividend came when the stock was selling north of $50 per share, producing a yield of .95%. The 25-cent dividend in 2007 represented a yield of .67% at the stock's then-price of $36 per share. After the market's close today, after the Board's recommendation was released, the stock gained 34 cents, a few cents more than it had lost in Thursday's trading.

CNH Global N.V. makes agricultural and construction equipment and has 11,500 dealers in 160 countries. It is a majority-owned subsidiary of Fiat S.p.A. More information about CNH and its Case and New Holland products can be found online.

1 comment:

  1. "The Board's recommendation is subject to the approval of shareholders"

    What a joke! CNH is 94% owned by FIAT. Of course this will be approved. I'm sure the money saved will be used to purchase their interest in Chrysler. Another brilliant decision made by CNH management!!