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Meredith (MDP) Enhances Shareholder Returns, Hikes Dividend

Zacks Equity Research

Meredith Corporation MDP is focused on boosting investors’ sentiments through several growth initiatives and shareholder-friendly moves. Evidently, the company announced a 5.5% hike in its quarterly dividend, increasing it from 54.5 cents a share to 57.5 cents. The annual dividend has increased about 12 cents to $2.30 per share. The revised dividend is payable Mar 15, 2019 to its shareholders of record as on Feb 28. In fact, this marks the 26th straight year of dividend hike for this media company. Meredith’s last hike of 4.8% was announced in January 2018.

These apart, Meredith launched its total shareholder return (TSR) strategy in October 2011 and has improved its dividend by $1.28, reflecting 127% increase. This strategy intends to boost shareholder value through dividend payouts, share repurchases and strategic investments in businesses to drive growth. Per management, TSR strategy includes long-term goal of consistent dividend hike with near-term goal of reducing its debt and building a strong balance sheet.

So far in fiscal 2019 through Jan 31, the company has repaid $700 million debt. Further, Meredith aims to reduce debt by $1 billion in the fiscal year. As of Jan 31, 2019, it is left with total outstanding debt of $2.5 billion.

We appreciate Meredith’s efforts to consistently enhance long-term shareholder value. Markedly, dividend hikes not only enhance shareholder returns but also raise the market value of the stock. Through this strategy, companies try to win investors and persuade them to either buy or hold the scrip instead of selling it.

Meredith’s initiatives in digital space, brand licensing activities, solid portfolio of television stations and a robust earnings surprise history are added positives. Keeping in these lines, the company is offloading non-core brands to focus on core operations. These seem inevitable due to increasing online readership, which has made the print-advertising model highly redundant.

Moreover, the company has been making investments, and undertaking acquisitions and partnerships. This Zacks Rank #3 (Hold) company acquired Time Inc. to expand its media portfolio. Meredith is on track with its restructuring plans as well.

However, Meredith is grappling with increasing SG&A expenses and higher interest expenses for quite a sometime now. Additionally, waning print media trends, shift from traditional advertising and stiff competition are worrisome.



In the past three months, this Des Moines, IA-based company has lost 7.2% against the industry’s 3.5% growth.

Nonetheless, we expect Meredith’s shareholder-friendly moves and other strategic growth endeavors to help it counter the aforementioned hurdles and spur momentum in the stock.

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