Thomson Reuters Rewards Shareholders with 26 Consecutive Annual Dividend Hikes (TRI)
By: Ned Piplovic,
Through several share consolidations and a major acquisition , the Thomson Reuters Corporation (NYSE:TRI) managed to deliver decades of consecutive annual dividend hikes to its shareholders.
Since the formation of the current Thomson Reuters business entity, the company has increased its annual dividend payout every year. However, even before the acquisition of the Reuters Group, the Thomson Corporation had a record of 14 consecutive annual dividend hikes. Also, since beginning dividend distributions in 1989, the Thomson Reuters had 16 annual dividend hikes in 18 years — which is equivalent to raising dividend distributions nearly 90% of the time.
In November 2018, Thomson Reuters announced its most recent share consolidation that resulted from the sale of a majority stake in its Financial & Risk (F&R) unit to private equity firm Blackstone Group L.P. (NYSE:BX). Thomson Reuters distributed a total of $2.3 billion — or $4.45 per share — and consolidated the outstanding common shares proportional to that cash distribution. The net effect of this transaction was essentially a reverse stock that exchanged one share prior to the consolidated for 0.9079 shares after the consolidation. Additionally, the transaction reduced the total number of Thomson Reuters’ outstanding shares from nearly 553 million to 505 million shares post-consolidation.
The share consolidation transaction also lifted the company’s share price, which has risen nearly 70% over the last year. The combination of steady annual dividend hikes and a rapidly rising share price might make the Thomson Reuters’s stock quite attractive to some investors. However, before taking a position in the stock, all interested investors should conduct their own research to ensure this stock’s compatibility with their own investment portfolio goals and strategies. However, investors that decide to add the Thomson Reuters stock to their portfolio and take advantage of the upcoming dividend payouts should act before the upcoming May 22, 2019, ex-dividend date. On the June 17, 2019, pay date, Thomson Reuters will distribute the next round of dividend distribution to all its shareholders of record before the ex-dividend date in late May.
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.
After two dividend hikes in the past 12 months, the current $0.36 quarterly dividend amount is 4.35% higher than the $0.345 income distribution from the same period last year. This new distribution amount corresponds to a $1.44 annualized payout. Unfortunately, the dividend hikes advanced at a much slower pace than the share price growth rate, which suppressed the current yield 35% below the company’s 3.5% average yield over the past five years.
However, despite trailing its own five-year average, Thomson Reuters’ current yield is still more than twice the 1.03% simple average of the overall Technology sector. Furthermore, the company’s current dividend yield also outperformed the 1.24% average yield of Thomson Reuters’ peers in the Information & Delivery Services industry segment by more than 80%.
Since the 2008 acquisition of the Reuters Group, the company has advanced its total annual dividend 24%, which corresponds to an average annual growth rate of 2.2% over the past decade of dividend boosts. Additionally, since the beginning of the current consecutive annual dividend hikes streak in 1994, Thompson Reuters enhanced its annual dividend payout amount 220%. This advancement pace corresponds to an average growth rate of 4.6% per year.
While the asset appreciation contributed nearly 95% of the gains, Thomson Reuters delivered combined total returns of 71% over the trailing 12 months. Leading into the beginning of the trailing 12-month period, the share price declined more than 21%, which made the one-year total return exceed the three year return. However, the total return over the past tree years was still significant at nearly 66%. Additionally, Thomson Reuters’ long-term shareholders more-than doubled their investment over the past five years with a total return of more than 102%.
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