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Despite the Downturn, Coach Initiates an Annual Dividend

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Mid-2009 hardly seemed the optimum time to begin paying dividends, but not for Coach Inc. (COH). The luxury retailer initiated a 30¢-per-share annual dividend in April. “The case for dividends,” says Chairman and CEO Lew Frankfort, “included attracting new investors, providing incentive for existing shareholders to revisit the stock and increasing the attractiveness of Coach stock to balanced-fund managers given the low bond yield environment.” Frankfort points out that Coach’s stock rose 15 percent on the day of the announcement.

Whereas many companies cut dividends this year, others, such as Frisch’s Restaurants Inc. (FRS), which operates Big Boys and Golden Corrals primarily in the Midwest, maintained them. “We’ve paid dividends since the day we went public in 1960,” says Vice President of finance and CFO Donald Walker. “We’ve been profitable every year during that period and considered it our duty to continue paying them once we started.”