Smucker Hikes Annual Dividend 9% for Two Decades (SJM)

The J. M. Smucker Company (NYSE:SJM) has rewarded its long-term shareholders with an average annual dividend growth rate of 9% over the past two decades and currently offers a 2.4% yield.

After a few more years of consecutive annual dividend hikes — four years to be exact — The J. M. Smucker Company will meet all the requirements needed to be considered a Dividend Aristocrat. Dividend Aristocrats is a group of approximately 50 companies from the S&P 500 Index with minimum market capitalization of $3 billion that have boosted their annual dividends for at least 25 consecutive years. The Smucker company’s share price has dropped significantly since its all-time high in August 2016, but the price has been on a steady uptrend since the beginning of November 2017.

The company will distribute the next dividend payout on March 1, 2018, to all its shareholders of record before the next ex-dividend date, which is currently set for February 8, 2018.

The J. M. Smucker Company (NYSE:SJM)

Founded in 1897 and headquartered in Orrville, Ohio, the J. M. Smucker Company manufactures and markets branded food and beverage products. The company operates through four business segments — International & Foodservice, U.S. Retail Coffee, U.S. Retail Consumer Foods and U.S. Retail Pet Foods. Among company’s almost 50 brands are Folgers, Dunkin’ Donuts, Jif, Smucker’s, Crisco, Pillsbury, Meow Mix, Milk-Bone, Natural Balance, Carnation and Hungry Jack.

The company’s current $0.78 quarterly dividend payout is 4% above its $0.75 quarterly distribution from the same period last year. This current quarterly amount is equivalent to a $3.12 annualized distribution and a 2.4% dividend yield. Additionally, the current yield of 2.4% is more than 11% above the company’s own 2.2% average dividend yield over the past five years.

The current 2.4% yield lags the 2.7% average yield of dividend-paying companies in the Processed & Packaged Goods segment by almost 10%. However, Smucker’s current 2.4% yield stands 40% above the 1.75% average yield of all companies in the Processed & Packaged Goods segment and 60% above the 1.53% average yield of the entire Consumer Goods sector.

The J. M. Smucker Company has been distributing dividends to its shareholders since 1949 and has boosted its annual dividend amount consecutively for more than two decades. Over the past 21 consecutive years, the company enhanced its total annual payout more than six-fold by hiking its annual distribution at an average growth rate of 9% per year.

As indicated earlier, the company’s relatively steady share price growth stalled at the beginning of August 2016 and the share price lost almost 35% of its value between its all-time high of $155.23 on August 1, 2016, and its recent low of just slightly above $102 in early November 2017. The share price rose almost 12% at the onset of its current trailing 12-month period and reached its 52-week high price of $149.22 on February 21, 2017. However, after peaking early during the last year, the share price slid down and lost nearly 50% by the time it reached its 52-week low of $99.99 on November 6, 2017.

After this substantial drop, the share price reversed direction and has been trending higher ever since its bottom in early November. The share price closed on January 22, 2018 at $127.38, which was still 14.6% below its February high and 4.6% lower than it was one year earlier. However, the January 22, 2018, closing share price was 27.4% higher than its November low and 42% higher than it was five years ago.

While the company provided a marginal total loss of 1.76% to its shareholders over the past 12 months, over the last three and five years, the shareholders enjoyed total returns of 28% and 57%, respectively. Shortly after its 52-week low in November, the company’s 50-day moving average (MA) started rising after being on a declining trend since late March 2017. The 50-day MA crossed above the 20-day MA on January 18, 2018, which could indicate that the share price has more room to grow in the next few periods.

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