Harley-Davidson Boosts Quarterly Dividend Payouts 1.4% (HOG)
By: Ned Piplovic,
While experiencing some struggles with its overall financial performance and a declining share price, Harley-Davidson, Inc. (NYSE:HOG) has continued to distribute a steady flow of rising quarterly dividend payouts.
The company announced a 1.4% boost to its quarterly dividend payouts for the next round of dividend distributions. This current dividend payout hike is Harley-Davidson’s ninth consecutive year of dividend increases. Additionally, the company has failed to increase its annual dividend payouts only twice in the past two decades.
In the aftermath of the financial crisis, the company cut its total annual dividend amount nearly 70% from $1.29 in 2008 to merely $0.40 in 2009. The company kept the dividend payouts flat at $0.40 for 2010. Harley-Davidson’s total annual dividend payout amount recovered fully in just five years after resuming annual dividend hikes in 2011. The $1.40 total annual payout for 2016 exceeded the $1.29 annual pre-crisis payout from 2008 by 8.5%.
Notwithstanding any other financial and operational issues, Harley-Davidson’s current dividend payout ratio of 46% is on the high end, but still within the 30% to 50% payout ratio range generally accepted by investors as sustainable. Furthermore, the current 46% ratio is not much higher than the company’s 39% payout ratio average over the past five years.
While Harley-Davidson is certainly facing some financial and overall business model uncertainties
in the long-term, the short-term outlook might offer an opportunity for some financial gains. The asset depreciation has driven the yield higher, which is a positive development for income-seeking investors. The share price has been rising steadily and has gained more than 21% since reaching its five year low in late December 2018.
Therefore, investors looking to collect above average dividend income, which might be supported by a continued asset appreciation over the short-term might be interested in adding HOG to their portfolio. However, interested investors should conduct their own due diligence and take a position before the March 13, 2019, ex-dividend date. All shareholders of record prior to that date will become eligible to receive their share of dividend payouts on the March 29, pay date.
Headquartered in Kenilworth, New Jersey and founded in 1891, Merck & Co., Inc. is a global health care company that focuses on the development of pharmaceutical products. Among its full spectrum of drugs and medications, the company provides therapeutic and preventive agents to treat cardiovascular diseases, type 2 diabetes, acute and chronic pulmonary conditions, chronic hepatitis C virus, HIV-1 infection, fungal, intra-abdominal infections, arthritis and pain, inflammatory, osteoporosis and fertility diseases. Additionally, the company offers products to prevent chemotherapy-induced and post-operative side-effects, treat brain tumors and certain types of lung cancer, as well as offers vaccines for measles, mumps, rubella, varicella, shingles, rotavirus gastroenteritis and pneumococcal diseases.
The company’s current $0.48 quarterly dividend is one cent — or 2.1% — higher than the $0.47 paid out in the same period last year. The company has followed this pattern of increasing its quarterly dividends by one cent in the first quarter of the year for the past six consecutive years. Merck’s current quarterly payout is equivalent to a $1.92 annualized payout per share and currently yields 2.8%. The rapid share-price growth in the second half of 2018 suppressed the current yield to 7.8% below the 3.0% five-year average yield. At the beginning of April 2018, the yield was nearly 3.6%.
However, even the lower current dividend yield is still 360% higher than the 0.6% average yield of the entire health care sector. Furthermore, Merck’s current 2.8% yield is 52% above the 1.82% simple average yield of Merck’s competitors in the Major Drug Manufacturers industry segment and even 6.4% higher than the 2.6% average yield of the segments’ only dividend-paying companies.
The company enhanced its total annual dividend amount by 26% over the past seven consecutive years, which is equivalent to a 3.4% average annual growth rate.
Merck’s share price fell 17% between the beginning of the trailing 12 months and its 52-week low price on April 6, 2018. However, the share price reversed direction and ascended more than 31% to peak at its 52-week high of $70.10 by August 20, 2018. After peaking in late August, the share price retreated approximately 1% to close on September 6, 2018 at $69.38. This closing price was almost 8% higher than one year earlier, 30% above its April low and 45% higher than it was five years ago.
The resurgence of capital growth and rising dividends rewarded Merck’s shareholders with significant total returns over the past few years. While the one-year total return came in at 11.4%, total returns over the past three and five years were 45.4% and 65.5%, respectively.
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