Brady Corporation Offers Shareholders 32 Years of Annual Dividend Hikes (BRC)
By: Ned Piplovic,
The Brady Corporation (NYSE:BRC) rewarded its long-term shareholders with a steady dividend income since its formation, as well as annual dividend hikes over the past 32 consecutive years.
While the company’s current 2.2% dividend yield still outperforms average industry yields, the current yield is slightly lower than the Brady Corporation’s average yield over the past five years. A yield decline caused by lower dividend distributions would be a usually a cause for concern. However, the Brady Corporation continues to provide annual dividend hikes, and the yield decline resulted from share price growth that outpaced the magnitude of the company’s annual hikes over the past few years.
The share price did experience a minor pullback in the first 60 days of the trailing 12 months. However, the share price reversed direction, recovered its losses quickly and continued ascend towards its 52-week high, which it reached within the last week of trading.
Investors interested in a stock with a long-term record of consistent dividend hikes that is accompanied by a relatively steady share price growth should do their due diligence and act on that information before the company’s next ex-dividend date on July 9, 2018. Taking a position before the ex-dividend date will ensure the investor’s eligibility for the next round of dividend distributions on the July 31, 2018, pay date.
Brady Corporation (NYSE:BRC)
Headquartered in Milwaukee, Wisconsin, and founded in 1914, the Brady Corporation manufactures and supplies identification solutions (IDS) and workplace safety (WPS) products for identification and protection of premises, products and people. The company’s IDS segment offers safety signs, pipe markers, labeling systems, spill control products and lockout/tagout devices for facility identification and protection. Additionally, this segment offers materials and printing systems for labeling, hand-held printers, wire markers, sleeves and tags for wire identification, as well as software and services for safety compliance auditing, procedure writing and training. The products in this segment also include name tags, badges, lanyards, access control software for people identification, wristbands and labels for tracking and enhancing the safety of patients in hospitals, custom wristbands for use in the leisure and entertainment industry, such as theme parks, concerts and festivals. The WPS segment provides a variety of workplace safety and compliance products, such as signs, tags, labels, asset tracking labels, first aid products, industrial warehouse and office equipment, as well as labor law compliance posters.
The company’s current $0.2075 quarterly dividend is 1.2% higher than $0.205 dividend payout from the same period last year. This new quarterly payout converts to a $0.83 annualized dividend payout and a 2.2% forward dividend yield. Despite the continued annual dividend hikes, the dividend income growth failed to match the company’s share price growth and the current dividend yield slid 17.3% below the company’s 2.6% average yield over the past five years.
However, even with the decline, the Brady Corporation’s current yield is still almost 11% higher than the 1.94% average yield of the entire Services sector and almost 38% above the simple average yield of all the companies in the Business Services industry segment.
Over the past two decades, the company enhanced its total annual dividend amount by more than 170%, which is equivalent to a 5.1% annual growth rate. The company’s annual dividend growth rate slowed over the past few years. Furthermore, while the company’s current dividend payout ratio of 54% is on the high end of the sustainable range, it is low enough to support the continuation of the annual dividend hike policy, at least over the near term.
The company’s share price experienced significant volatility and lost more than half of its value between its all-time high in 2007 and September 2015. However, the share price has been rising since then with substantially less volatility. The price declined 6.2% over the first 45 days of the trailing 12-month period and closed at its 52-week low of $31.95 on August 11, 2017. However, the share price reversed its downtrend and recovered its losses by the first week of September. The share price continued to ascend toward its 52-week high of $40.65 on June 18, 2018, for a total gain of more than 27% above the August low. After peaking in mid-June 2018, the share price pulled back 5% and closed on June 27, 2018, at $38.60. This closing price was 13.4% higher than it was one year earlier, nearly 21% above the 52-week low from August 2017 and 23% higher than it was five years earlier.
The 13.4% share price growth combined with the $0.8275 total dividend paid for a total return of 16.4% over the past 12 months. Because the share price declined in the first two years of the trailing five-year period, the total return over that period of 41% was lower than the 61% total return over the past three years.
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