Penske Automotive Group Revs Up Dividend To 14 Cents

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Some companies tend to raise their shareholder dividends every few years, but car dealerPenske Automotive Group ( PAG ) has lifted its payout every few months lately.

On Tuesday, the company revved up its payout for the seventh time in about a year and a half. It hiked its dividend by a penny to 14 cents a share. The dividend will be paid March 1 to holders on Feb. 11.

Increasing the dividend to 14 cents per share "demonstrates the strength of our financial performance, our commitment to returning capital to shareholders and the confidence we have in the auto retail environment," said Penske Automotive Group President Robert H. Kurnick in a news release.

With the latest dividend hike, Penske pays 56 cents a share on an annual basis. This works out to a yield of about 1.7%, the second highest among the five dividend-paying stocks in the Retail/Wholesale - Automobile group. This industry group has climbed to a No. 22 ranking out of 197 groups as of Wednesday's IBD, up from No. 32 about three weeks ago. Penske has an IBD Composite Rating of 97 -- the third highest in the 13-member group.

Tough times forced the company to halt its dividend in February 2009. Penske reinstated its dividend program about two years later. The company's payout has doubled since then.

Penske's earnings fell in 2008 and 2009, but grew 53% and 35% over the next two years. It's on pace for a third straight year of double-digit percentage growth. The auto retailer will post Q4 results Feb. 6. Analysts see Q4 profit rising 13% to 53 cents a share.

The firm's full-year 2012 earnings are expected to increase 25% to $2.23 a share. For 2013, analysts see its bottom line gaining 10% to $2.46 a share.

So far this week, Penske has pulled back from a record high. That's after it blew past a 32.46 buy point from a cup-with-handle base on Jan. 23 in big volume. The stock passed a 30.22 trigger in a slightly low handle Dec. 31, but did so in bone-dry volume.

Penske has an up-down volume ratio of 1.6, indicating strong demand. The stock is owned by top-performing growth funds such as Fidelity Contra .



The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Personal Finance , Investing Ideas

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