TUESDAY MARCH 16, 2010

Encouraging News

This morning three well established companies, General Electric, Pepsico and Limited Brands, announced share buybacks and/or dividend increases. This is encouraging news for the markets.  Corporate announcements regarding dividends are powerful signaling mechanisms for the markets.  Why?  Because nothing hammers a stock price more than a dividend cut.  It shows the future prospect for a company are poor and the management feels it needs to preserve cash.  Therefore, management tends to be very cautious when it comes to the decision to increase a company's dividend or to buy back shares.  They will only increase a dividend when they are highly confident in their company's long-term prospects.  Think of it as a company confidence indicator.  The news from GE,PEP and LTD today is indeed good news, particularly since these companies are from diverse industries.  Hopefully more companies will follow.

POSTED AT 1899-12-30 13:09:00.0

KEN ENTENMANN, CFA
SENIOR VICE PRESIDENT AND
THE DIRECTOR OF INVESTMENT MANAGEMENT SERVICES

Ken is a Senior Vice President and the Director of the Trust and Investment Services at Alliance Bank, N.A. He has 23 years of investment experience and oversees the management of assets totaling $1 billion. He holds a B.S. in Applied Economics and Business Management from Cornell University and an M.B.A. from the William E. Simon Graduate School of Business Administration at the University of Rochester. He has also earned his Chartered Financial Analyst designation. He is a member of the Executive Committee of the Trust Division of the New York Banker's Association. He is also a director of the Central New York Community Foundation.

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