Hewlett Packard Enterprise Company Raises Quarterly Dividend 50% (HPE)
By: Ned Piplovic,
The Hewlett Packard Enterprise Company (NYSE: HPE) is going to increase its quarterly dividend almost 50% for the upcoming July distribution, just six months after increasing its quarterly dividend 15.4% from previous levels.
While 2018 is only Hewlett Packard’s third year of dividend distributions, the company has hiked its annual dividend for all three of those years and currently offers a 2.8% dividend yield. In a sector that is known for low yields, and whose current simple average yield is just marginally above 1%, HPE’s 2.8% payout is impressive.
In addition, HPE has given shareholders a double-digit-percentage total return over the last 12 months, despite pulling back in the last 90 days or so. This is thanks to significant share price appreciation throughout much of 2017, as well as the company’s rising dividend policy.
Investors who are interested in receiving the 50% quarterly dividend increase should be sure to purchase the company’s shares prior to the next ex-dividend date of June 12, 2018. Hewlett Packard will distribute its next quarterly payout on July 4, 2018.
Hewlett Packard Enterprise Company (NYSE:HPE)
The Hewlett Packard Enterprise Company (HPE) provides information technology (IT) solutions to business and public sector enterprises. Headquartered in Palo Alto, California, the company was created as one of the segments from the Hewlett-Packard Company split in October 2015. HPE operates through the Enterprise Group, Financial Services and Corporate Investments business segments. The Enterprise Group segment offers data storage solutions, including servers and converged storage solutions, as well as traditional storage solutions, such as tape, storage networking and legacy external disk products. The Financial Services segment provides leasing, financing, IT consumption programs and utility programs, as well as asset management services. Finally, the Corporate Investments segment is involved in certain cloud-related incubation activities and the company’s research & development arm — Hewlett Packard Labs.
Hewlett Packard distributed its first dividend of 5.5 cents per share in January 2016 and proceeded to raise the quarterly dividend distribution by $0.01 each subsequent January. However, HPE changed the pattern in 2018 as a second dividend increase was announced for July. In addition to being the first additional yearly increase, the increase was also much more substantial, taking the quarterly payout from $0.075 to $0.115 per share, an increase of nearly 50%. The new $0.115 quarterly amount converts to a $0.45 annualized dividend payout and a 2.8% forward yield. Since January 2016, Hewlett Packard’s annual payout has more than doubled, and over that period, the annual amount has advanced at an average growth rate of 43% per year.
Because of the traditionally low yields of the Technology sector, HPE’s current 2.8% yield is nearly 160% higher than the 1.08% simple average of the entire Technology sector. Likewise, the Technical & System Software industry sub-segment has a similarly low average yield of 1.02%, which puts HPE’s 2.8% yield nearly 175% higher. Even if all the companies in the sub-segment with no dividend distributions are ignored, HPE’s current yield still outperforms the 1.8% average yield of only dividend-paying companies by more than 55%.
Hewlett Packard began trading as a separate corporate entity in October 2015, and the share price rose steadily with minimal fluctuations until May of 2017, when the share price experienced one of its first major stalls. The 52-week low of the last 12 months was reached on June 29, 2017 at a price of $12.70. While some moderate volatility persisted, the share price rose 53% by March 2018, setting multiple new all time-highs in the process. Since the March peak of $19.48, shares have pulled back some 17% and closed on June 5, 2018 at $16.06.
Even taking the recent double-digit-percentage pullback into consideration, HPE’s share price is over 20% higher than it was at this time last year. Including dividends, HPE’s one-year total return is around 23%. Total return since the company’s inception in October 2015 is nearly 75%.
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Ned Piplovic is the assistant editor of website content at Eagle Financial Publications. He graduated from Columbia University with a Bachelor’s degree in Economics and Philosophy. Prior to joining Eagle, Ned spent 15 years in corporate operations and financial management. Ned writes for www.DividendInvestor.com and www.StockInvestor.com.