Use access key #2 to skip to page content.

sagitarius84 (< 20)

McCormick & Company (MKC) Dividend Stock Analysis

Recs

8

December 14, 2009 – Comments (4) | RELATED TICKERS: MKC

McCormick & Company, Incorporated, a specialty food company, engages in the manufacture, marketing, and distribution of flavor products and other specialty food products to the food industry worldwide. It operates in two segments, Consumer and Industrial. The company, which has raised dividends for 23 consecutive years, is a member of the Mergent’s dividend achievers index. Back in November McCormick & Company increased its quarterly dividend by 8.30% to 26 cents per share

Since 1999 this dividend growth stock has delivered an average total return of 10.70% annually.

The company has managed to deliver a 11.70% average annual increase in its EPS between 1999 and 2008. Analysts expect McCormick & Company to earn $2.33 share next year, followed by an increase to $2.51/share in the year after that. The company is in the middle of a cost restructuring program, where annual savings have reached almost 56 million in 2008. In addition to that the company is trying to grow through acquisitions, which add to its diverse portfolio of consumer and industrial brands.

Although the Return on Equity is high at 23.90%, it is below its highs in the early 2000s. Rather than focus on absolute values for this indicator, I generally want to see at least a stable return on equity over time.

The annual dividend payment has increased by an average of 11.10% annually since 1999, which is commensurate with the growth in EPS.

An 11 % growth in dividends translates into the dividend payment doubling every six and a half years. If we look at historical data, going as far back as 1990, McCormick & Company has actually managed to double its dividend payment every six years on average.

The dividend payout ratio has consistently remained below 50% over the past decade. A lower payout is always a plus, since it leaves room for consistent dividend growth minimizing the impact of short-term fluctuations in earnings.

Currently the McCormick & Company is attractively valued at 17.8 times earnings, yields 2.90% and has an adequately covered distribution payment. I would look to enter McCormick & Company (MKC) on dips below $34.

Full Disclosure: None

Relevant Articles:

- Eight stocks with positive dividend momentum
- What are your dividend investing goals?
- Where are the original Dividend Aristocrats now?
- Estimating future Dividend Growth

4 Comments – Post Your Own

#1) On December 14, 2009 at 9:51 AM, sagitarius84 (< 20) wrote:

What's your take on MKC?

Report this comment
#2) On December 14, 2009 at 10:53 AM, FreeMortal (29.32) wrote:

thanks for the analysis

Report this comment
#3) On December 14, 2009 at 11:42 AM, edwjm (99.87) wrote:

I like it and I own some in real life.

Report this comment
#4) On December 14, 2009 at 10:04 PM, rhallbick (99.65) wrote:

I saw about a month ago that my local Wal*mart was in the process of pulling about 75% of the McCormick spices off of their shelves and replacing them with a generic brand.  All that is left is the gourmet stuff and the specialty blends. 

Report this comment

Featured Broker Partners


Advertisement