McCormick (MKC) Hikes Dividend, Boosts Shareholder Value
To boost shareholder value, the board of McCormick & Co. Inc. (MKC) recently approved a 3 cents hike in its quarterly dividend to 40 cents translating to an annual yield of 1.6%. The dividend hike marks an 8.1% increase from the prior dividend of 37 cents and comes exactly after a year. The increased dividend will be paid on Jan 14, 2015 to stockholders on record as of Dec 31.
This food company has been paying dividends every quarter since 1925 and the current increase marks the 29th consecutive hike in dividend. The last dividend hike of 8.8% was announced on Nov 27, 2013 and paid on Jan 14, 2014.
Besides dividend, the company also has a solid buyback program in place. McCormick is currently repurchasing shares under the $400 million authorization approved in Apr 2013 and has $234 million available for repurchase under the plan.
McCormick's dividend payout, share repurchases, and annual cash returned to shareholders totaled $357 million in 2013, exceeding $300 million for the first time. This was 20% higher than $297 million cash returned in 2012. In 2014, the company expects to use nearly $200 million of cash for dividends and share repurchases.
We appreciate McCormick’s efforts to consistently enhance long-term shareholder value amid a volatile economy. While dividend payments boost shareholder wealth, a share buyback program helps the company to reduce outstanding share count, thereby increasing earnings per share and return on equity.
Over the long term, this Zacks Rank #2 (Buy) company expects higher cash flow and more efficient asset utilization with an anticipated increase in net income and reductions in working capital. Another food company Sysco Corp. (SYY) also recently raised its quarterly dividend in November by 3.4% from 29 cents to 30 cents.
Other better-ranked food companies that are worth considering include Aramark Holding (ARMK) and Post Holdings, Inc. (POST). Both these stocks sport a Zacks Rank #1 (Strong Buy).
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