Word: dividend
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...interest rates they can afford. Two weeks ago, Florida Power & Light could sell only about half of a $100 million issue that paid interest at 8¾%. Nor do utilities have much chance of successfully selling new stock issues. When Consolidated Edison of New York skipped its first-quarter dividend, its action depressed the prices of all utility stocks. Robert Nathan, a consultant to utilities and member of TIME'S Board of Economists, suggests that if utilities are not allowed to raise their rates faster, their financing problems could become so severe that the only way out would...
...began thunderously. Franklin New York Corp., the holding company for the nation's 20th largest commercial bank (assets: nearly $5 billion), announced that it would skip its quarterly dividend because earnings in the first quarter had plunged 83% from a year earlier, to a sickly 2? a share. It was believed to be the first time that a major bank had passed a dividend since the Depression. The Federal Reserve Board felt called upon to make two highly unusual announcements: that the Comptroller of the Currency had guaranteed that the bank was "solvent," and that the board stood ready...
...most banks no one could position such immense sums without having his activities come quickly to the attention of supervisors. The Securities and Exchange Commission began an investigation of another puzzling matter: that 9,500 shares of stock were purchased by about 65 bank employees just before the dividend was passed...
Although Con Ed's first-quarter profits dropped 21%, they were still large enough (48? a share) to maintain the dividend (45?). But the utility's managers decided they must hang onto every penny for uses even more important than rewarding stockholders. Most crucial: paying for the low-sulfur Arab oil that the utility must buy in order to avoid polluting the skies over New York City and Westchester County. A year ago the oil cost $4.50 per bbl.; today Con Ed is paying as much as $15.50. A near doubling of its electric and gas rates since...
Rating Lowered. By passing the dividend, though, Con Ed has created more problems for itself. Like most utilities, it must frequently sell new issues of stock or bonds to finance maintenance and expansion of its system. When the dividend was omitted, Standard & Poor's immediately lowered the credit rating on Con Ed bonds-so much that some potential investors, such as savings and loan associations, will be legally barred from buying them. As a result, Con Ed in effect is asking New York State to do some of its borrowing for it. Under a plan that the legislature...