Last month, I highlighted three companies that I believe are being too stingy with their shareholders. All three were well-known, successful companies, but all three refuse to share the company's wealth with investors by paying out a dividend.
This time around, I decided to pick on a different group of companies -- those that do pay a dividend, but could be putting a lot more coin in your pocket. While these companies do get my tip-of-the-hat for paying a dividend in the first place, they're still getting stamped "stingy" until they properly cut investors in on the action.
Start computing a bigger dividend
I've got news for you, Hewlett-Packard (NYSE: HPQ ) : You're not an up-and-coming growth company anymore.
With a market cap of $124 billion and total assets of nearly $114 billion, HP has clearly entered the realm of the behemoths. And what do you do when you're a giant company and you produce way more cash than you actually need for the business? You pay a dividend.
Is Dell (Nasdaq: DELL ) and its lack of a dividend some sort of excuse for HP's lame payout? Hardly. Just as my mamma always told me, you don't go jumping off of bridges just because everyone else is doing it.
Besides, HP has shown its willingness to deploy capital outside of the business. It bought back billions upon billions of dollars' worth of stock over the past five years. There are no two ways around it, though: Buybacks are the lazy man's dividend. Get with the program, HP, and boost that payout!
Give a little of that gold back to investors, man
With former dividend stalwarts like Bank of America (NYSE: BAC ) and Wells Fargo (NYSE: WFC ) paying investors next to nothing, am I crazy to think that Goldman Sachs (NYSE: GS ) would ever increase its dividend to a significant level?
In short, yes. But a guy can dream, right?
Given its seeming ability to print cash in the back rooms of its New York offices, one might think there would be enough moola lying around for Goldman to offer its investors a decent dividend yield. Fat chance. Goldman's current dividend of $1.40 per share meant a 6.3% payout ratio for 2009.
And it's not as if the company seems averse to supposedly returning cash to investors. In 2007, it spent nearly $9 billion buying back stock -- which seems like rather poor timing for such a huge buyback. I wouldn't hold my breath for a juicier Goldman dividend, but the company could certainly afford it.
For everything else, there are dividends
"There are some things money can't buy. For everything else, there's MasterCard (NYSE: MA ) ." Or so the slogan goes.
Well I've got news for you, MasterCard: There are a lot of things that money can buy, and it would be awfully nice if your investors got a little bit more of it.
MasterCard has only been on the public markets since 2006, but I don't see that as a good excuse for a paltry 0.2% yield and a downright weak 5.4% payout ratio. The company was hit by a big legal settlement in 2008, but its financial strength hardly skipped a beat. MasterCard's balance sheet currently sports $2.9 billion in cash and barely any debt. The company also produces a ton of cash and has very few capital spending requirements.
In the past, MasterCard has bought back chunks of stock, but as I said above, I've never been a huge fan of buybacks. MasterCard definitely has the wherewithal to pay a larger dividend, and it's exactly the kind of business that would be an ideal dividend payer.
And while we're at it, we should probably rope Visa (NYSE: V ) in here, too. It's in almost the exact same position (except that it has even more cash!).
Think I've been too hard on these companies? Is there another company you know of that should be paying out more to its investors? Scroll down to the comment box and fire away.
Warren Buffett may not pay out a cash dividend, but he's provided plenty of dividends in the form of investing tips over the years.