2 Companies Boost Dividends 5% and Offer 10%-Plus One-Year Share Price Growth
By: Ned Piplovic,
A large consumer goods corporation and a specialty chemicals company boosted their quarterly dividends 5% to continue a long record of annual dividend hikes and rewarded their shareholders with double-digit percentage increases to their share prices over the past 12 months.
Neither company has lowered its annual dividend in the past two decades. But they both have averaged annual compounded growth rates of more than 7%.
With late-May ex-dividends and mid-June pay dates, respectively, both companies provide a quick dividend income payout and an opportunity to take long positions in securities with long-term rising dividends and asset appreciation.
Johnson & Johnson (NYSE:JNJ)
Johnson & Johnson researches, develops, manufactures and sells health care products worldwide. The company operates through three segments: Consumer, Pharmaceutical and Medical Devices. The Consumer segment offers baby care, oral care, women’s health products and beauty products under multiple brands, which include Johnson’s, Listerine, Clean & Clear, Stayfree, Carefree, Band-Aid, Neosporin, Neutrogena and more. Additionally, the company manufactures and distributes Tylenol, Sudafed, Benadryl, Zyrtec, Motrin IB, Pepcid and other over-the-counter medicines. Through its Pharmaceutical segment, the company offers various products in the areas of immunology, infectious diseases and vaccines, neuroscience, oncology, cardiovascular and metabolic diseases. The Medical Devices segment provides orthopedic, general surgery, sterilization and disinfection, biosurgical, endomechanical and electrophysiology products, as well as disposable contact lenses. Founded in 1885, Johnson & Johnson’s headquarters are in New Brunswick, New Jersey.
The company boosted its quarterly dividend payout 5% from $0.80 to $0.84. The annualized distribution of $3.36 yields 2.6%. The current dividend boost marks a 54th consecutive annual dividend hike since the company started paying a dividend in 1944. Over the past 20 years, the company grew its annual dividend distribution at an average rate of 12.3% every year.
Known for stable growth, the company boosted its share price 12.2% since May 2016 and more than 100% over the past five years. The May 16, 2017, closing price of $127.77 is less than 1% below the all-time price high from mid-March 2017.
Cabot Corporation (NYSE:CBT)
The Cabot Corporation operates as a specialty chemicals and performance materials company. The company offers carbon black and rubber blacks, which are used to enhance the physical properties of the systems and applications in which they are incorporated, as well as a rubber reinforcing agent and performance additive in tires, hoses, belts, extruded profiles and molded goods. Additionally, the company provides derivatives of carbon and black rubber for use in inks, coatings, plastics, adhesives, toners, batteries, displays applications, as well as high-pressure and high-temperature oil and gas well construction. The company also provides activated carbon products used for the purification of water, air, food and beverages, pharmaceuticals and other liquids and gases. The Cabot Corporation was founded in 1882 and is headquartered in Boston, Massachusetts.
The most recent quarterly dividend hike of 5% raised the payout from $0.30 to $0.315. The annualized distribution is $1.26 and yields 2.4%. While the company held its annual dividend flat from 2008 to 2011, it has raised its annual payout for the past six consecutive years. The annual dividend grew at an average rate of almost 10% annually since 2011 and almost 7.5% every year for the past two decades.
The company’s share price rose 35% between May 2016 and late April 2017, when it reached its 52-week high. Since the April price peak, the price dropped about 15% and closed at $52.10 on May 16, 2017. That price still is almost 15% above its share price in May 2016.
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Ned Piplovic is the assistant editor of website content at Eagle Financial Publications. He graduated from Columbia University with a Bachelor’s degree in Economics and Philosophy. Prior to joining Eagle, Ned spent 15 years in corporate operations and financial management. Ned writes for www.DividendInvestor.com and www.StockInvestor.com.