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10 Stocks Taking Care of Investors: No. 5 Hewlett-Packard (HPQ)
These 10 stocks have been rewarding investors with share buybacks, strong dividends, sales/earnings and stock performance and are worthy cornerstones of any portfolio. You can track the entire series here.
Number 5: Hewlett-Packard Company (NYSE: HPQ)
HP is a leading global provider of products, technologies, software, solutions and services to individual consumers, small-and medium-sized businesses and large enterprises, including the public and education sectors. The company sells PCs, printers, servers, and consulting services among other things. In 2008, HP announced a massive $14 billion acquisition of EDS. In April 2005, Mark Hurd took over as CEO of HP leading to tremendous success.
Shares Buybacks: Over the past few years, HP has repurchased billions and billions of dollars of its stock. In 8/05, HP approved a $4 billion share repurchase, in 02/06 they authorized another $4 billion, in 8/06 HP stepped it up with a $6 billion repurchase, in 03/07 HP stepped it up again with a $8 billion repurchase plan, in 11/07 HP announced a new $8 billion repurchase plan, and 9/08 HP announced another $8 billion repurchase plan. As of April 30, 2009, HP had remaining authorization of $7.1 billion for future share repurchases under the $8.0 billion repurchase authorization approved by HP's Board of Directors on September 19, 2008.
Dividends: HP has declared and paid cash dividends each fiscal year since 1965. The current annual dividend is $0.32 per share, or a modest 0.9% yield. HP has maintained its current pay out for many years. In 2000, HP announced a 2:1 stock dividend or stock split.
Revenue/Profit: HP has seen net revenues rise from $79.9 billion in 2004 to $118.4 billion in 2008. Net earnings in that time has more than doubled from $3.5 billion to $8.3 billion. Diluted EPS in that time is up 183% from $1.15 to $3.25. In its latest quarter (Q2), HP report EPS of $0.86. The company sees FY09 EPS of $3.76-$3.88 with sales down 4%-5%.
Stock Performance: Shares of HPQ have performed well against peers and the broader market. Shares of HPQ are up 2.2% YTD, versus a 2.3% rise in the S&P 500 and 18% rise in ETF Technology Select Sector SPDR (NYSE: XLK). Over the last year, HPQ is down 22% versus a 32% drop in the S&P 500 and 26% drop in the Technology Select Sector SPDR (NYSE: XLK). Over a 5 year period, HPQ is up 71% versus a 19% drop in the &P 500 and 11% drop in the Technology Select Sector SPDR (NYSE: XLK).
With billions and billions in past share repurchases, plus billion more remaining under its current plan, a long-time dividend payout, strong revenue/earnings growth, and market-beating stock performance, HP is "taking care of investors."
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