Thomson Reuters Corporation Offers 10 Years of Dividend Boosts (TRI)

After its formation in 2008 through the Thomson Corporation’s acquisition of the Reuters Group, the Thomson Reuters Corporation continued a policy of annual dividend boosts and hiked its annual dividend payout in each of the past 10 consecutive years.

While currently almost 10% lower than it was 12 months ago, the company’s share price has more than doubled over the past decade and currently trends at the lower margin of the five-year average growth trend. However, the share price has resumed its rising trend over the past 90 days and technical indicators are very close to hinting that this current uptrend could continue for the short term.

After dropping below the 200-day moving average (MA) in late December 2017, the 50-day MA declined over the subsequent six months. However, the recent share price uptrend has also reversed the 50-day MA trend. Since reversing direction on June 4, 2018, the 50-day MA increased from 8.1% below to just 1.4% below the 200-day MA by the beginning of August 2018. At this pace, the 50-day MA could break above the 200-day MA in a bullish manner within the next 10 to 14 days. Additionally, the share price is currently above both moving averages for the first time since the end of January 2018. Together, these two indicators hint that the share price could extend its current 90-day uptrend for a few additional periods.

The main driver behind these positive technical indicators are the company’s positive financial results, which include surpassing quarterly earnings per share (EPS) consensus estimates three times in the past four periods. During its most recent results call on August 8, 2018, the company announced quarterly EPS of $0.17, which outperformed analysts’ estimate of $0.11 by 54.5%.

The company will distribute its next dividend on company’s September 17, 2018, pay date to all its shareholders of record prior to the August 15, 2018, ex-dividend date.

Thomson Reuters Corporation (NYSE:TRI)

Based in Toronto, Canada, and formed by the Thomson Corporation’s purchase of the London-based Reuters Group in 2008, the Thomson Reuters Corporation sells electronic content and services to professionals primarily on a subscription basis and operates through three business segments. The Financial & Risk segment offers critical news, information and analytics. Next, the Legal segment offers critical online and print information, decision tools, software and services to support legal, investigation, business and government professionals. Furthermore, the Tax & Accounting segment provides integrated tax compliance and accounting information, software and services for professionals in accounting firms, corporations, law firms and government. Lastly, the Thomson Reuters Corporation also operates Reuters, which provides real-time multimedia news and information services to newspapers, television and cable networks, radio stations and websites.

The share price advanced almost 20% over the first two months of the trailing 12 months and achieved its 52-week high of $48.06 on October 17, 2017. After peaking in mid-October 2017, the share price declined more than 22% before bottoming out at $37.64 on May 11, 2018. However, the share price reversed trend in May 2018 and advanced to close on August 8, 2018, at $42.39. While almost 10% lower than one year earlier, this new closing price is 12.6% above the 52-week low from 90 days earlier and almost 30% higher than the share price from five years ago.

The current $0.345 quarterly dividend amount corresponds to a $1.38 annualized payout and a 3.3% forward dividend yield. While the current yield is on par with the company’s average yield over the past five years, it is double the 1.11% average yield of the overall Technology sector. Furthermore, TRI’s current yield is 78% above the 1.83% average yield of the Information & Delivery Services industry segment, as well as 33.4% higher than the 2.44% average yield of the segment’s dividend paying companies.

Since 2008, the company has advanced its total annual dividend by 28%, which translates to a 2.5% average annual growth rate over the past decade of dividend boosts. However, the dividend boosts were insufficient to overcome the share price decline over the past 12 months. Therefore, the shareholders experienced an 11.2% total loss over the past year. But, shareholders enjoyed a total return of almost 11% over the past three years and a total return of almost 40% over the past five years.

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