McCormick & Company: Dividend Stock Analysis
Dividend Growth Investor submits:McCormick & Company (MKC), Incorporated 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. This dividend champion has increased distributions for the past 25 consecutive years. The latest dividend increase was in November 2010, when the company raised distributions by 8% to 28 cents/share.Over the past decade this dividend stock has delivered a negative annualized total return of 13.20% to its shareholders.
The company has managed to deliver an average increase in EPS of 9.70% per year since 2000. Analysts expect McCormick to earn $2.61 per share in 2010 and $2.82/share in 2011. The company has been active on the acquisition front over the past decade, which has helped it grow, but has been leading to a decrease in return on equity. Almost 60% of sales are derived from the US operations, and the rest is split between Europe and other countries. The largest customers include PepsiCo (PEP) and Wal-Mart (WMT), each accounting for 11% of sales. Besides growth through acquisitions, maintaining and increasing market share comes from innovation. The company needs to innovate and differentiate its product line, in order to deflect private label competition, which could drag margins lower.Complete Story »
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