Alcoa: Ex-Dividend? No Problem

NEW YORK (TheStreet) -- One of the things that has always made "mature" companies an attractive proposition is their dividend yields. After all, where there is often a lack of growth, a check every quarter has served to be enough of an impetus to entice otherwise impatient investors.

In the case of aluminum giant Alcoa (AA), I wonder what will result from the setting of its ex-dividend date.

With the date set for Wednesday, the company said that as of the market close Tuesday owners of shares will be eligible for a dividend of 3 cents per share, which currently pays a yield of 1.4%.

While I suspect that very few investors would avoid the stock solely by virtue of its now ex-dividend status, I do wonder if management has allowed enough time for its recent earnings disappointment before making this announcement.

As much as I have always come to the company's defense, sometimes watching the stock movement as well as the progress of the aluminum market reminds me too much of quicksand. There is no question that at $8 the stock is considerably undervalued from its true potential. The only question is when is it going to move, and in what direction. Its recent earnings did little of offer any confidence that it will be sooner and not later.

When looking at the numbers, what was noticeable with Alcoa is that it continues to battle with the same nagging symptoms. While the company did beat analysts' expectations, astute investors understood it beat numbers that had been revised considerably lower over the past 90 days. Nonetheless, the company generated revenue of $5.963 billion with no earnings per share. It earned 6 cents when excluding special items, topping previous forecasts of 5 cents.

The company is still feeling the effects of double-digit annual declines in aluminum prices that have hurt both its gross margins and operating earnings, down 7 points and 77%, respectively. The company's management, however, deserves some credit for what I can see as having made the best of a bad situation.

What has hurt the company in the past was the less-than-stellar cost structure and failing to capitalize on growth opportunities. But the question is, will these improvements be enough to light a fire under the stock?

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