Dividend Futures Jump, Will Stock Prices Follow?

Every now and again, we're not above making an easy prediction. In short, the answer to our question is yes, at least where the S&P 500 is concerned. Here's the short list of companies announcing dividend increases after the market close on Thursday, 3 December 2009, which are likely to provide upward momentum to the market:

• Comcast Boosts Dividend By 40% - Comcast ranks #43 in the S&P 500.



• Cameco Approves Dividend Increase for 2010 (Note: As a Canadian company, Cameco is not part of the S&P 500. They are, however, a commodity producer, which is important for reasons we'll discuss below.)



• Ecolab Raises Cash Dividend 11 Percent - Ecolab is weighted at #201 in the S&P 500.



• CompuCredit Shares Soar on Dividend, Spinoff Plan - CompuCredit is not part of the S&P 500.



• Bank of America Files Complex Stock Sale for TARP - Note: Exiting TARP will allow BAC to restore higher dividend payments, helping push the market higher, much as we've seen with other distressed financials who have reached the end of the road with the bailout program. BAC is an S&P 500 heavyweight, ranking #14 in the index's market cap weighting system, which means that once its dividend plans become defined, it will significantly boost the S&P 500.



• OGE Energy Corp. Increases Quarterly Dividend (Note: OGE isn't part of the S&P 500, but is a commodity producer.)
  

Also in the day's news, the dollar has dipped again against other currencies, which if recent trends continue, indicates upward momentum for stock prices, and particularly those of commodity producers. Think of it as a kind of hedging strategy, with stocks as a safe haven for preserving the value of the U.S. dollar for those holding dollars.

The big economic news expected on Friday, 4 December 2009 in the U.S. is the latest non-farm jobs report from the BLS. The expectation is that the unemployment rate will tick upward as real jobs continue to be shed in the U.S. economy. Unlike, say, those jobs the government creates or saves.

That information though, is already baked into the market. And for that matter, the short timing of this analysis won't offer much in the way of an investing opportunity. For that, the best hope is that the jobs report is even more negative than expected, leading to a dip in stock prices as part of a short-lived, noisy reaction.

Update 4 December 2009: Instead of ticking upward, the unemployment rate dipped to 10.0%, so look for a short-lived, noisy upward reaction in today's market action instead!

Disclosure: No, Ironman doesn't own any of the individual stocks discussed in this post!