Alcoa Cuts Dividend As Expected
- March 16, 2009
- Dividend Stocks
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Dow component Alcoa (AA: 10.67 0.00%) announced today that they are slashing their quarterly dividend by 82%. The quarterly cash dividend payment falls to $.03 per share from $.17 per share.
The cut reduces Alcoa’s dividend yield from 11.1% to 2.0% and now is no longer the Dow’s highest yielding dividend stock.
The dividend cut was not unexpected and we had eDividendstocks.com had predicted a 70% dividend cut.
Reducing the quarterly dividend is expected to save the company $400 million and is part of a larger cost cutting initiative announced by the company. These actions are expected to save the company more than $2.4 billion annually.
“By taking quick and decisive actions, Alcoa has been able to stay ahead of the evolving economic crisis,” said Klaus Kleinfeld, President and CEO of Alcoa. “Today’s actions better prepare Alcoa to manage through a prolonged downturn and position the Company for the future. We believe that we now have in place the strategic and operational fundamentals that will enable Alcoa to emerge even stronger when the economy recovers.”
“Given the impact of the economy on Alcoa’s capital structure, the Board of Directors decided to reduce the dividend,” said Kleinfeld. “This decision was made after comparisons to peer companies and consideration of the interests of our shareholders. We are pleased to be able to continue Alcoa’s record of paying a dividend every quarter for the past 60 years.”
In after hours trading, the stock was down 12% to $5.39 on the news, after finishing the day up 6.8%. Since the beginning of the year, the stock has dropped 46%,
The quarterly dividend will be payable on May 25, 2009 to shareholders of record as of May 8, 2009.
