Understanding the Dividend Prospects of McCormick & Co Inc
McCormick & Co Inc (MKC, Financial) recently announced a dividend of $0.42 per share, payable on 2024-04-22, with the ex-dividend date set for 2024-04-05. As investors look forward to this upcoming payment, the spotlight also shines on the company's dividend history, yield, and growth rates. Using the data from GuruFocus, let's look into McCormick & Co Inc's dividend performance and assess its sustainability.
What Does McCormick & Co Inc Do?
In its more than 130-year history, McCormick has grown to become the leading global manufacturer, marketer, and distributor of spices, herbs, extracts, seasonings, and other flavorings. Beyond end consumers, McCormick's customer base also includes top quick-service restaurants, retail grocery chains, and other packaged food and beverage manufacturers. And its reach is global, with nearly 40% of sales generated beyond its home turf to include 170 other countries and territories. In addition to its namesake brand, the firm's portfolio includes Old Bay, Zatarain's, Thai Kitchen, Frank's RedHot, French's, and Cholula, among others.
A Glimpse at McCormick & Co Inc's Dividend History
McCormick & Co Inc has maintained a consistent dividend payment record since 1984. Dividends are currently distributed on a quarterly basis. McCormick & Co Inc has increased its dividend each year since 1985. The stock is thus listed as a dividend aristocrat, an honor that is given to companies that have increased their dividend each year for at least the past 39 years. Below is a chart showing annual Dividends Per Share for tracking historical trends.
Breaking Down McCormick & Co Inc's Dividend Yield and Growth
As of today, McCormick & Co Inc currently has a 12-month trailing dividend yield of 2.06% and a 12-month forward dividend yield of 2.18%. This suggests an expectation of increased dividend payments over the next 12 months.
Over the past three years, McCormick & Co Inc's annual dividend growth rate was 8.00%. Extended to a five-year horizon, this rate increased to 8.70% per year. And over the past decade, McCormick & Co Inc's annual dividends per share growth rate stands at 9.00%.
Based on McCormick & Co Inc's dividend yield and five-year growth rate, the 5-year yield on cost of McCormick & Co Inc stock as of today is approximately 3.13%.
The Sustainability Question: Payout Ratio and Profitability
To assess the sustainability of the dividend, one needs to evaluate the company's payout ratio. The dividend payout ratio provides insights into the portion of earnings the company distributes as dividends. A lower ratio suggests that the company retains a significant part of its earnings, thereby ensuring the availability of funds for future growth and unexpected downturns. As of 2024-02-29, McCormick & Co Inc's dividend payout ratio is 0.58.
McCormick & Co Inc's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks McCormick & Co Inc's profitability 8 out of 10 as of 2024-02-29, suggesting good profitability prospects. The company has reported positive net income for each of year over the past decade, further solidifying its high profitability.
Growth Metrics: The Future Outlook
To ensure the sustainability of dividends, a company must have robust growth metrics. McCormick & Co Inc's growth rank of 8 out of 10 suggests that the company's growth trajectory is good relative to its competitors.
Revenue is the lifeblood of any company, and McCormick & Co Inc's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. McCormick & Co Inc's revenue has increased by approximately 5.90% per year on average, a rate that underperforms approximately 54.22% of global competitors.
The company's 3-year EPS growth rate showcases its capability to grow its earnings, a critical component for sustaining dividends in the long run. During the past three years, McCormick & Co Inc's earnings increased by approximately -1.60% per year on average, a rate that underperforms approximately 61.06% of global competitors.
Lastly, the company's 5-year EBITDA growth rate of 11.50%, which underperforms approximately 38.76% of global competitors.
Next Steps
Considering McCormick & Co Inc's consistent dividend payments, solid dividend growth rate, moderate payout ratio, strong profitability, and growth metrics, the company presents a compelling case for investors seeking steady income with a potential for growth. While some growth metrics suggest areas for improvement, the company's overall financial health appears robust. Investors may want to keep an eye on future earnings reports and market conditions to reassess the sustainability of McCormick & Co Inc's dividends. For those interested in expanding their portfolio with similar stocks, GuruFocus Premium users can screen for high-dividend yield stocks using the High Dividend Yield Screener.
This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
