Vector Group Boosts Quarterly Dividend 5%, Pays 7% Yield (VGR)
By: Ned Piplovic,
The Vector Group Ltd. reached its 20th year of consecutive annual dividend hikes with its current 5% quarterly dividend boost and the company pays an above-average 7% yield.
In addition to two decades of rising dividends at double-digit-percentage rates, the company’s share price rose more than 14% for a combined shareholder total return that exceeds 25% over the last 12 months. The company has its next ex-dividend date on December 19, 2017, while the pay date is scheduled for the last week of the year on December 27, 2017.
Vector Group Ltd. (NYSE:VGR)
Founded in 1911 and based in Miami, Florida, Vector Group Ltd. manufactures and sells cigarettes in the United States through its Liggett Group LLC and Vector Tobacco Inc. subsidiaries. The company’s Tobacco segment produces and distributes more than 120 brand styles of cigarettes under the Eagle 20’s, Pyramid, Grand Prix, Liggett Select and Eve brand names. Additionally, this segment manufactures cigarettes for various partner and private label brands.
In addition to a separate E-Cigarettes segment, the Vector Group is also involved in the real estate business through its New Valley subsidiary. The New Valley subsidiary owns approximately 70% interest in Douglas Elliman Realty LLC, which operates the largest brokerage in the New York Metropolitan area. Additionally, New Valley also holds investments in several significant real estate projects in California and New York. The real estate segment owns real estate properties, engages in land development activities, and provides residential brokerage and real estate sales marketing services. Furthermore, Vector Group operates elliman.com, which is a portal for consumers to search properties and access market information, as well as offers neighborhood guides and other interactive content. Additionally, the company’s AskElliman.com facilitates communication with consumers and provides them with access to information from real estate to mortgage financing.
The share price experienced some volatility over the past year before embarking on a steady uptrend at the beginning of November 2017. Between December 6, 2016, and March 1, 2017, the share price rose more than 10% from just under $20 to slightly over $22. However, after that quick growth spurt, the share price dropped 14.4% in just three weeks to its 52-week low of $18.91 by March 22, 2017. After a 13% recovery by June 9, 2017, the share price dropped back again to $18.94 by August 3, 2017.
After dropping to just $0.03 above the 52-week low, the share price regained half of its losses within a week and continued to trade sideways in the $20 to $21 range until early November. Since November 6, 2017, the share price ascended nearly 12% and closed on December 5, 2017, at $22.91, which was just 0.2% below the 52-week high closing price of $22.94 it reached on the previous day. Additionally, the December 5, 2017, share price was 14.7% higher than it was one year ago, 21.2% higher than the 52-week low from March 22, 2017, and almost double the share price from five years ago.
The company boosted its quarterly dividend 5% from $0.381 in the previous period to the current $0.40 payout. This current payout is equivalent to a $1.60 annualized distribution and a 7% yield. The company’s current yield is more than 165% higher than the 2.61% average yield of Vector Group’s peers in the Cigarettes Industry segment and more than 300% above the 1.73% average yield of the companies in the Consumer Products sector.
The company started paying dividends in 1990 and has boosted its annual dividend amount for the past 20 consecutive years. Over those two decades, the annual payout grew at an average rate of 13.9% per year. Because of this extraordinary growth rate, the current annual dividend amount is more than 13-fold higher than it was in 1997.
The combination of the rising dividend distribution and strong asset appreciation rewarded Vector Group’s shareholders with significant total returns over the past few years. The total return over the past 12 months exceeded 27%, with three-year and five-year total returns reaching 43% and 137%, respectively.
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Ned Piplovic is the assistant editor of website content at Eagle Financial Publications. He graduated from Columbia University with a Bachelor’s degree in Economics and Philosophy. Prior to joining Eagle, Ned spent 15 years in corporate operations and financial management. Ned writes for www.DividendInvestor.com and www.StockInvestor.com.