Service Corporation International SCI has been focused on enhancing shareholder returns. The largest provider of deathcare products and services in North America has announced a dividend hike. It will now pay a quarterly dividend of 21 cents per share, up 10.5% from the prior rate of 19 cents. The hiked dividend will be paid out on Dec 31, to shareholders of record as of Dec 15, 2020.
Notably, Service Corporation currently has a dividend payout of 31.7%, a dividend yield of 1.5% and free cash flow yield of 6.4%. With an annual free cash flow return on investment of 10.5%, ahead of the industry’s 10.2%; the increased dividend is likely to be sustainable. Dividend payouts are one of the biggest enticements for investors and Service Corporation is committed to boosting shareholders’ wealth.
Apart from this, Service Corporation has been focused on making share buybacks. Toward this end, the company recently announced an increase of $431 million to its repurchase program. The newly-unveiled program took the total share buyback authority to $500 million as of Aug 12.
What Else Should You Know?
The company remains committed toward pursuing strategic buyouts for both its segments, and building new funeral homes to generate greater returns. During the first nine months of 2020, the company incurred capital expenditures of $155.6 million. In the third quarter, capital expenditures amounted to $225 million, which was partially directed toward maintenance and cemetery development. Also, the company made investments to fuel growth via buyouts and through the construction of new opportunities. These investments are touted to be accretive to the company in the near term. Apart from this, capital expenditures in the third quarter were allocated toward shareholder-friendly moves.
Notably, the Zacks Rank #1 (Strong Buy) company has been gaining on increased funerals performed due to the coronavirus pandemic, which along with an improved cost structure, aided its performance during the third quarter. During the quarter, both earnings and revenues improved year over year and surpassed the Zacks Consensus Estimate, with both Funeral and Cemetery segments benefiting from higher core revenues. The bottom line was backed by increased gross profit stemming from greater funeral services and burials performed. Also, robust growth in recognized preneed revenues in the company’s cemetery business was a driver.
We note that shares of Service Corporation have gained 7.4% in the year-to-date period compared with the industry’s growth of 0.1%.
Other Solid Staple Bets
United Natural Foods UNFI, with a Zacks Rank #1, has a trailing four-quarter earnings surprise of 4.8%, on average. You can see the complete list of today’s Zacks #1 Rank stocks here.
Carriage Services CSV, with a Zacks Rank #2 (Buy), has a long-term earnings growth rate of 15%.
Pilgrim’s Pride PPC, carrying a Zacks Rank #2, has a long-term earnings growth rate of 2.6%.
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