Diesel engines maker Cummins Inc. (CMI) Tuesday afternoon announced a big hike in its quarterly dividend payout, but its lowered 2012 forecast sent its shares spiraling lower.

The Columbus, OH-based company said expects second quarter revenues of around $4.45 billion, which would badly miss Wall Street’s outlook of $5.07 billion.

For the full year 2012, Cummins now forecasts revenue numbers to be flat from 2011. It had previously expected a 10% gain in revenue.

On a positive note, the company lifted its quarterly dividend payout by 25%. The new dividend of 50 cents per share (up from a prior 40 cents) will be paid on Sept. 1 with an ex-dividend date of Aug. 20.

Cummins shares plunged $3.90, or -4.2%, in afternoon trading Tuesday.

The Bottom Line
Shares of Cummins Inc. (CMI) will now have a 2.10% dividend yield, based on the higher dividend payout and last night’s closing stock price of $95.44. The stock has technical support in the $85-$90 price area. If the shares can firm up, we see overhead resistance around the $100-$103 price levels.

Cummins Inc. (CMI) is not recommended at this time, holding a Dividend.com DARS™ Rating of 3.3 out of 5 stars.

Be sure to visit our complete recommended list of the Best Dividend Stocks, as well as a detailed explanation of our ratings system here.