Pharmaceutical Products Lifts Dividend 20%

Pharmaceutical Products increases its dividend on the heels of a slew of bad news that has pressured the stock over the past few months.
Author:
Publish date:

Despite tough times of late -- or perhaps because of them --

Pharmaceutical Product Development

(PPDI)

hiked its annual dividend by 20%, the company announced Tuesday.

Last week, PPD said it would swap out its chief executive in a move that seemed to confuse and worry investors more than anything else.

"There are probably more significant operational issues at PPD than we previously believed," wrote one stock analyst in response. (The company moved its previous CEO to a new role -- executive chairman -- and promoted a board member, a retired brigadier general named David Grange, to CEO.)

And about a month ago, when the Wilmington, N.C., company released first-quarter earnings that met expectations, it also cut both its top- and bottom-line forecasts for the rest of the year. Its rationale for the outlook was generic: slumping demand for its services amid the recession (the company conducts drug research on contract for pharma companies).

PPD's stock price has suffered accordingly, and the increased dividend may have been an effort by management to halt those declines. Shares of the company have tumbled 33% year-to-date, even while the broader market has rallied.

On Tuesday, PPD stock closed at $19.83, up 2.6%, or 51 cents, on heavier-than-average volume.

The company said it will pay out an annual dividend of 60 cents a share, or 15 cents a quarter, up from last year's 50 cents per share.

Copyright 2009 TheStreet.com Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed. AP contributed to this report.