Sysco Corporation Boosts Annual Dividend Payout for Nearly Five Decades (SYY)

The Sysco Corporation (NYSE:SYY) raised its dividend again this year to extend its record of annual dividend hikes to 47 consecutive years.

As a component of the S&P 500 Index, with market capitalization exceeding $3 billion and at least 25 consecutive years of rising dividends, the Sysco Corporation earned the Dividend Aristocrat label, which is a designation that the food distributor currently shares with only 50 other companies.

In addition to the long-term rising dividend payouts, the company rewarded its shareholders with a 2.3% current dividend yield and an 8.6% asset appreciation for a combined total return of almost 12% over the last 12 months. The company has its next ex-dividend date set for January 4, 2018, and the pay date will follow just three weeks later, on January 26, 2018.

Sysco Corporation (NYSE:SYY)

Founded in 1969 and headquartered in Houston, Texas, the Sysco Corporation markets, distributes and sells food products to restaurants, health care and educational facilities, lodging establishments and other customers who prepare meals away from home. In addition to food products, the company also offers equipment and supplies for the foodservice and hospitality industries. The company operates through three segments – U.S. Foodservice Operations, International Foodservice Operations, SYGMA – and offers its products and services in the United States, Canada, Bahamas, Mexico, Costa Rica and seven European countries. During fiscal 2017, the company completed the acquisition of the Brakes Group, a leading European foodservice distributor with operations in the United Kingdom, Ireland, France, Sweden, Spain, Belgium and Luxembourg.

Sysco Corporation currently operates 324 distribution facilities serving approximately 425,000 business customers. For fiscal year 2017, which ended on July 1, the company generated sales of $55.4 billion, which was a 12% increase over the previous year and includes the full impact of the Brakes Group acquisition. Also compared to the previous year, the company’s adjusted operating income and its adjusted earnings per share rose 20% each.

The company hiked its quarterly dividend 9.1% from the previous period’s $0.33 to the current $0.36 distribution. This current distribution converts to a $1.44 annualized dividend payout and a 2.3% dividend yield. The company’s current yield of 2.3% exceeds the 1.87% average yield of the Services sector by more than 25% and is 108% higher than the 1.13% average yield of its peers from the Wholesale Food segment.

The Sysco Corporation started paying dividends in 1970. Just over the past two decades of consecutive annual dividend boosts, the company has enhanced its annual dividend at an average growth rate of more than 11% per year. Resulting from the 11% compound growth rate, the annual dividend payout rose more than eight-fold over the past 20 years.

The company’s share price stumbled in the first half of its current trailing twelve-month period and fell 13% from $56.47 on December 20, 2016, to its 52-week low of $49.11 on July 6, 2017. After bottoming out at the beginning of July 2017, the share price rose steadily and recovered all its losses by the beginning of November 2017. After another quick 7% drop, the share price resumed its rising trend and reached its 52-week high of $62.64 on December 8, 2017. The share price pulled back 2.1% after its December peak and closed on December 18, 2017, at $61.34, which was 8.6% higher than the share price from December 20, 2016, almost 25% above the share price’s 52-week low from early July 2017 and 95% higher than it was five years ago.

The combination of the rising dividend income and capital growth rewarded the company’s shareholders with an 11.9% total return in the past year, a 64.3% total return over the past three years and a 112% total return over the past five years.

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