Herman Miller soars 34% as it rejoins dividend club

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Shares of Herman Miller MLHR.O soared 34% on Thursday after the office chair seller posted blowout quarterly results and joined an expanding list of companies reinstating their dividends as they become more confident about recovering from the coronavirus.

Herman Miller late on Wednesday reported revenue and earnings far above analysts’ expectations, with sales from its retail segment surging 40% thanks to strong demand from people kitting out their home offices due to the pandemic.

Pointing to “our confidence in the strategic direction of the business, strong liquidity position and operating performance this quarter,” the Zeeland, Michigan company also re-established its quarterly cash dividend, which it suspended in early April, one of several steps it took then to cut costs due to the coronavirus threat.

Shares of Steelcase SCS.N, an office furniture competitor that reports its quarterly results on Sept. 22, surged 14%.

S&P 500 companies slashed or suspended over $40 billion in dividends in the second quarter, the deepest quarterly drop since 2009, according to S&P Dow Jones Indices.

But after cuts tapered off mid-year as the U.S. economy began to rebound, S&P Dow Jones Indices estimated that S&P 500 companies would see only a 2% decline in overall 2020 dividend payments, not nearly as dire as analyst projections earlier this year of around a 10% drop.

As coronavirus lockdowns ease and businesses reopen, several U.S. companies have now restarted their dividends or increase existing dividends.

“The rebound of dividend and buyback sentiment together with the stabilization of dividend cut announcements suggest the worst may be over and a sharp drop in cash returns in 2H20 is unlikely,” Evercore ISI strategist Dennis DeBusschere wrote in a recent client note.

Microsoft MSFT.O, which has soared to record highs during the pandemic, this week hiked its dividend by 10%.

Companies recently reinstating dividends include Guess GES.N, on Sept. 2, and Estee Lauder EL.N on Aug. 20. Foot Locker FL.N also resumed its dividend in August, even as the shoe retailer declined to reinstate its full-year 2020 guidance because of ongoing uncertainty related to COVID-19.