Goldman Sachs Gets the Warren Buffett Boost
is pricing a public offering of 40.65 million common shares at $123 per share, for total gross proceeds of approximately $5 billion.
This offering comes on the heels of the recently-announced $5 billion strategic investment by
( BRKA) in the form of perpetual preferred stock, and brings the recent total amount of capital raised by Goldman Sachs to $10 billion.
Warren Buffett's company will also receive warrants to purchase $5 billion of common stock with a strike price of $115 per share, which are exercisable at any time for a five year term.
The investment from Mr. Buffett comes at a great time for Goldman Sachs, as the company enters a new era as a bank holding company. Because the investment from Mr. Buffett is for preferred shares, we are not as excited as we would have been had he taken a chunk of common shares. We will be watching GS closely, as the proposed federal bailout plan could be a catalyst to move the shares in either direction. The company has a 1.12% dividend yield, based on last night's closing stock price of $125.05. For now, investors may want to see how things unfold with the bailout plan before making any large bets.
Goldman Sachs is not recommended at this time, holding a Dividend.com Rating of 3.1 out of 5 stars.
Lowe's Cautious on 2009 Outlook
Home improvement retailer
will be opening fewer stores next year, as the U.S. economy and housing slump continues to curb demand for its products.
The company now sees openings of 75 to 85 stores in fiscal 2009. At its 2007 analyst meeting, Lowe's had said it would open 135 to 145 stores in North America. For 2009, Lowe's is forecasting profit of $1.40 to $1.65 a share. The current analyst estimates are for $1.53 a share for 2008 and $1.57 a share for 2009, according to
We had been bullish on some of the home-related stocks, but recent market actions toward the consumer space now have us concerned. We will be watching Lowe's closely, as well as other home-related stocks, as we continue to search for a solid bottom in this sector.
Lowe's is not recommended at this time, holding a Dividend.com Rating of 3.4 out of 5 stars.
Capital One Financial Will Sell Stock to Boost Reserves
Capital One Financial
plans to sell 14 million common shares in an effort to help boost the company's reserves for bad loans.
The $200 million reserve increase reflects the continuing weakness in the U.S. economy. Management said the increase would give it the capacity to absorb $7.2 billion of loan losses through Sept. 2009.
The company expects the charge-off rate for its U.S. Card line of business to be in the low 6 percent range for the third quarter of 2008, rising to around 7 percent in the fourth quarter.
We have been recommending shares of COF since Sept.8, when shares were trading at $44.71. The company mentioned in its earnings call that it will continue its dividend payouts, despite having to sell shares to boost bad loan reserves. We recommend waiting for the stock to pull back a bit before adding to any current positions. The company has a 2.79% dividend yield, based on last night's closing stock price of $53.72.
Capital One Financial is a "Recommended" dividend stock, currently holding a Dividend.com rating of 3.5 out of 5 stars.
H.B. Fuller Profits Sag, Will Raise Prices to Compensate
manufacturer of adhesives, sealants, paints, and other specialty chemicals, took a hit on its third-quarter profit due to rising raw material costs.
Management believes this situation is temporary, and intends to further recover its raw material cost increases through more appropriate pricing actions in the quarters ahead, insinuating that price increases are on the horizon.
The company maintains the earnings guidance provided earlier this month, continuing to expect net revenue of between $380 and $390 million, and income from continuing operations per diluted share of between $0.40 and $0.45. Analysts are expecting revenue of $376.3 million and per-share earnings of 42 cents.
We have avoided the shares of H.B. Fuller since our early June initiation of coverage. We would like to see the stock start to make a move off its recent lows before taking a serious look at the name. The company's dividend yield of 1.14% -- based on last night's closing price of $22.99 -- is not attractive.
H.B. Fuller is not recommended at this time, holding a Dividend.com Rating of 3.2 out of 5 stars.
Be sure to visit our complete
recommended list of the Best Dividend Stocks
as well as a
detailed explanation of our ratings system
At the time of publication, the author had no positions in stocks mentioned, although positions may change at any time.
Tom Reese and Paul Rubillo are senior editors of Dividend.com. Visit Dividend.com for more dividend stock ratings, picks, news, and analysis for long-term and income-seeking investors.