Corning Incorporated Offers 11% Quarterly Dividend Hike (GLW)
By: Ned Piplovic,
Corning Incorporated (NYSE: GLW) has boosted its annual dividend every year for nearly a decade and its current dividend yield is slightly above 11%.
Since the onset of the current consecutive hike streak in 2011, Corning Incorporated has tripled its total annual dividend payout amount. Additionally, the company managed to maintain a double-digit-percentage annual dividend hike rate over that same period.
Corning’s dividend distributions have rewarded shareholders with a steadily rising dividend income over the past decade. However, shortly after reaching its all-time high of more than $113 in late 2000, the share price collapsed to just $1.00 over the subsequent 24 months during the dot-com crash and Corning eliminated its dividend distributions after the second-quarter dividend payout in 2001.
After a few years of recovery, Corning reintroduced the dividend distributions in the third quarter of 2007. However, the first dividend hike after the reinstatement of dividend payouts did not happen right away. Instead, the company paid the same $0.05 quarterly dividend amount for 17 subsequent quarters. After starting the current dividend hike streak in 2007, the company boosted its annual dividend amount for the past nine consecutive years.
While Corning continuously offers robust financial results, the only concern for the future of the company’s dividend hike streak is the dividend payout ratio of 64%. This payout ratio level is a little higher than the 50% figure which investors generally see as the upper limit of the sustainable payout ratio range. While the 50% limit is not a strict cutoff, a payout ratio higher than that level indicates that the company uses more than half of its annual earnings to cover dividend distributions and might not have sufficient capital to fund investment and improvement projects for business expansion.
However, investors should do their own research and, if interested, take a long position prior to the company’s next ex-dividend date on February 27, 2019. Shareholders of record prior to that ex-dividend date will receive the next round of dividend distributions on the March 29, 2019, pay date.
Corning Incorporated (NYSE:GLW)
Corning Incorporated manufactures and sells specialty glass, ceramics and other advanced materials worldwide. The company’s Display Technologies segment manufactures glass substrates for liquid crystal displays (LCDs) used in televisions and modern computer screens. The Optical Communications segment manufactures fiber optic cable. Additionally, the Environmental Technologies segment manufactures ceramic substrates and filter products for emissions control. The Specialty Materials segment manufactures products that provide approximately 150 material formulations for glass, glass ceramics and fluoride crystals. The Life Sciences segment manufactures and supplies consumable scientific laboratory products. Founded in Somerville, Massachusetts, as the Bay State Glass Company in 1851, the company moved to Brooklyn, New York, before settling in its current location. The company changed its name to Corning Glass Works and moved again in 1968 to Corning, New York, where it is still based. The company change its name to Corning Incorporated in April 1989.
Corning’s current $0.20 quarterly dividend payout is a result of an 11.1% dividend hike above the previous period’s $0.18 quarterly payout amount. The new quarterly dividend amount corresponds to a $0.80 annualized distribution and a 2.3% forward dividend yield. This yield is 11% higher than the company’s 2.1% five-year yield average.
Furthermore, Corning’s current 2.3% yield is nearly double the 1.16% average yield of the entire Technology sector and 30% higher than the 1.77% simple average yield of the Communication Equipment industry segment.
Since the beginning of the current streak of annual dividend hikes in 2007, Corning has quadrupled its annual dividend payout amount. This level of advancement is equivalent to an average growth rate of 16.7% per year.
Unlike many companies that still have not recovered fully from share price declines in 2018, Corning delivered to its shareholders a small asset appreciation over the past year to accompany the rising dividend distributions. The combined total return on shareholders’ investment was more than 19% over the past 12 months. Additionally, shareholders nearly doubled their investment with a 95% total return over the past three years. Because the company’s share price declined by nearly a third of its value in 2015, the five-year total return of 96% is only marginally higher than the three-year return.
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