Wednesday, December 06, 2006

Stryker Doubles Dividend

Stryker (SYK) announced a 50% increase in its dividend. The new dividend will total 22 cents per share versus 11 cents per share last year. The 5-year historical payout ratio is about 6%. Stryker is on of those companies that pays a dividend once a year. The new yield will equal approximately .4%. Stryker has an S&P Earnings and Dividend Ranking of B+.

When looking at dividend growth stocks, factor to consider is the yield level. If the yield is at a low enough level, how meaningful is a 50% dividend increase. The additional cash paid out will not be that significant relative to the level of earnings. On the other hand, the fastest growing dividend payers tend to be those with the lower yields.

(click on graph for larger image)

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