McCormick & Co. Pays Rising Dividends for More Than Three Decades (MKC)
By: Ned Piplovic,
McCormick & Company, Inc. has been paying rising dividends for more than three decades and managed during the past 20 years an average growth rate of nearly 10% per year.
The company’s most recent dividend payout rose more than 8% versus the previous period and the dividend yields 2.1%. Additionally, the company’s share price rose almost 8% over the last 12 months.
The company will pay a dividend in the first week of next year, on January 4, 2018, to all its shareholders of record prior to the ex-dividend date on December 26, 2017.
McCormick & Co Inc. (NYSE:MKC)
Founded in 1889 and based in Sparks, Maryland, McCormick & Company, Inc. manufactures, markets and distributes spices, seasoning mixes, condiments and other related products. The company operates through two segments, Consumer and Industrial. The Consumer segment offers spices, herbs and seasonings, as well as desserts. This segment markets its products under the McCormick, Lawry’s, Club House, Gourmet Garden and OLD BAY brands in the Americas. Additionally, this segment distributes products under various other brands, such as Ducros, Schwartz, Kamis and Vahiné brand names in Europe, the Middle East and Africa, as well as the DaQiao brand in China. This segment also markets regional and ethnic brands, such as Zatarain’s, Stubb’s, Thai Kitchen and Simply Asia. The Consumer segment further supplies its products under private labels. The Industrial segment offers seasoning blends, spices, herbs, condiments, coating systems and compound flavors to multinational food manufacturers and food service customers.
McCormick & Company enhanced its quarterly dividend 8.3% from the previous period’s $0.47 to the current $0.52, which yields 2.1% and is equivalent to a $2.08 annualized distribution per share. The company started paying dividends in 1925 and has been paying rising dividends since 1987. As an S&P 500 company with more than 25 consecutive years of rising dividends, McCormick & Company is part of a distinct group of 51 companies that are designated Dividend Aristocrats.
Just over the past two decades, the company continued to pay rising dividends at an average growth rate of 9.8% per year. Over the past 20 consecutive years of rising dividends, the total annual dividend payout rose 550%. With a 51% dividend payout ratio, the company is positioned well to continue paying rising dividends for the near future.
While the dividend yield of 2.1% might appear to be low compared to some other sectors, McCormick’s yield is 15% higher than the 1.8% average yield of the company’s competitors in the Processed & Packaged Goods segment and 28% higher than the 1.6% average yield of all the companies in the Consumer Goods segment.
The company’s share price dropped a little more than 4% between the start of its current trailing 12-month period on December 13, 2016, and January 10, 2017, when the share price fell to its 52-week low of $89.79. However, after bottoming out at the beginning of January 2017, the share price caught an uptrend and ascended 17.5% towards its 52-week high of $105.53, which it reached on June 15, 2017.
The share price started falling immediately after peaking and dropped nearly 13% to $92.07 by July 19, 2017. After the July dip, the share price embarked on a longer uptrend and rose almost 10% over the subsequent five months. During that period, the share price experienced some volatility and went through three distinct trends – up, down, then up again – where the share price moved more than 5% in the direction of the trend. On December 12, 2017, the share price closed at $101.07, which was 7.9% higher than it was 12 months earlier, 12.6% higher than the 52-week low price from January 2017, and 58% higher than it was five years prior.
As an old company focused on long-term growth and shareholder value, McCormick’s total return to investors is not as high as some equities in other industries. However, McCormick’s rising dividends and appreciating assets have rewarded the company’s shareholders with total returns of 11.35% in the last year, 45% over the past three years and 70% over the last five years.
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