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Service Corporation (SCI) Rewards Investors With Dividend Hike

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Service Corporation International SCI is focused on enhancing shareholders’ returns. The largest provider of deathcare products and services in North America announced a dividend hike. It will now pay a quarterly dividend of 25 cents per share, up 9% from the prior rate of 23 cents. The hiked dividend will be paid out on Mar 31, 2021, to shareholders of record as of Mar 15.

Service Corporation currently has a dividend payout of 20%, a dividend yield of 1.6% and a free cash flow yield of 7.6%. With an annual free cash flow return on investment of 13.7%, the increased dividend is likely to be sustainable. During fourth-quarter 2021, management deployed $248 million of capital to shareholders via dividends and share repurchases. Dividend payouts are one of the biggest enticements for investors and Service Corporation is committed to boosting shareholders’ value.

Zacks Investment Research
Zacks Investment Research


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What Else Should You Know?

Service Corporation is benefiting from escalated levels of funeral services, burials and preneed sales. Courtesy of such upsides, the company’s fourth-quarter 2021 top and the bottom line increased year over year and surpassed the Zacks Consensus Estimate. The upside can be attributed to increased funeral and cemetery revenues.

During the quarter, consolidated Cemetery revenues came in at $443.5 million, up from $422.4 million reported in the year-ago quarter. Comparable cemetery revenues increased 5%, mainly driven by an increase in core revenues. Comparable preneed cemetery sales production rose 13.4%, led by increased quality sales averages and the number of contracts sold. Consolidated Funeral revenues rose to $599.7 million from $547.8 million reported in the year-ago quarter. Total comparable funeral revenues rose 8.7%, mainly led by growth in core funeral revenues of $31.6 million. Comparable preneed funeral sales production increased 13.5%.

Considering the persistent impacts of the pandemic, Service Corporation raised its 2022 bottom-line view. The company expects the midpoint of adjusted earnings per share (EPS) to come in at $3.00 compared with earnings of $2.80 projected earlier. The company envisions adjusted EPS in the range of $2.80-$3.20 in 2022.

Apart from this, Service Corporation is committed to pursuing strategic buyouts for its segments and building new funeral homes to generate greater returns. In 2021, the company incurred capital expenditures of $303.7 million. Management expects capital improvements at existing locations and cemetery development expenditures in the band of $270-$290 million in 2022.

Shares of the Zacks Rank #1 (Strong Buy) company have rallied 18.1% in the past year compared with the industry’s growth of 17.1%.

Looking for Solid Consumer Staple Stocks? Check These

Some better-ranked stocks are Tyson Foods, Inc. TSN, Flowers Foods FLO and Medifast, Inc. MED

Tyson Foods, a meat provider, currently sports a Zacks Rank #1. Shares of Tyson Foods have increased 38.1% in the past year. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Tyson Foods’ current financial year sales suggests growth of 9.5% from the year-ago reported number. TSN has a trailing four-quarter earnings surprise of 32.2%, on average.

Flowers Foods, which produces and markets packaged bakery products, carries a Zacks Rank #2 (Buy). Shares of Flowers Foods have moved up 28.3% in the past year.

The Zacks Consensus Estimate for Flowers Foods' 2022 financial year EPS suggests growth of 3.2% from the year-ago reported number. FLO has a trailing four-quarter earnings surprise of 9%, on average.

Medifast, the manufacturer and distributor of weight loss, weight management, healthy living products and other consumable health and nutritional products, currently carries a Zacks Rank #2. Shares of Medifast have declined 31% in the past year.

The Zacks Consensus Estimate for Medifast’s current financial year sales and EPS suggests growth of about 63% and 49.3%, respectively, from the year-ago reported figure. MED has a trailing four-quarter earnings surprise of 17.3%, on average.


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