Eastman Kodak Co, the largest photography company, increased its dividend for the first time in four years and said it will shift payments to a semiannual basis from quarterly.
The dividend was increased to US$0.45 from US$0.44 and will be paid Dec. 20 to shareholders of record as of Dec. 3, the company said. Kodak will then switch to semiannual payments in July and December. The Rochester, New York-based company expects to pay full-year dividends of US$1.80 a share in 2002.
Kodak's cash flow is strongest in the second half of the year because of the seasonal nature of the company's business, spokesman Paul Allen said. Kodak usually borrows money to pay its dividend. Switching to semiannual payments lowers administrative and borrowing costs, although Allen couldn't say by how much.
"Clearly it's more cost effective to do it this way," Allen said. "Although it's not all that much."
The increased dividend may entice investors to buy the stock and keep existing shareholders from selling in slow economic times and particularly in light of the Sept. 11 terrorist attacks, analysts said.
"They are responding to concern over the dividend's viability, and it is viable, but dividends themselves don't create a value for shareholders," said Peter Ausnit, an analyst at Deutsche Banc Alex. Brown, which has a "market perform" rating on Kodak stock and doesn't own shares. "A share repurchase is a much better way to do it."
Kodak shares were unchanged at US$35.49. They have dropped 9.9 percent this year.
The company has paid a quarterly dividend since at least 1958, spokesman Gerard Meuchner said.
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