McCormick & Co., Inc. : MKC-US: Dividend Analysis : April 10th, 2017 (record date) : By the numbers : April 14, 2017

Our analysis is based on comparing McCormick & Co., Inc. with the following peers – TreeHouse Foods, Inc., Conagra Brands, Inc., Hain Celestial Group, Inc., PepsiCo, Inc., Pinnacle Foods, Inc., B&G Foods, Inc., Tyson Foods, Inc. Class A, Tiger Brands Limited Sponsored ADR and Naturex SA Sponsored ADR (THS-US, CAG-US, HAIN-US, PEP-US, PF-US, BGS-US, TSN-US, TBLMY-US and NTUXY-US).

McCormick & Co., Inc.’s dividend yield is 1.81 percent and its dividend payout is 48.52 percent. This compares to a peer average dividend yield of 2.02 percent and a payout level of 54.43 percent. This relatively lagging dividend performance could spur some dividend action going forward – as long as the company’s relatively strong dividend quality score of 67 out of a possible score of 100 looks sustainable.

Dividend Yield
Dividend Quality Score

Dividend Quality Overview

  • Over the last twelve months (prior to February 28, 2017), MKC-US paid a high quality dividend, which represents a yield of 1.81% at the current price.
  • Dividends paid during each of the last five years were consistently of high quality.
  • The ending cash balance is less than the last full year dividend payment and cannot be relied on to cushion any significant reduction of cash flows in the future.
Dividend Quality Score Vs Dividend Yield

Quadrant label definitions. Hover to know more

High Score;High Yield, High Score;Low Yield, Low Score;Low Yield, Low Score;High Yield

Dividend Coverage

Over the last twelve months (prior to February 28, 2017), MKC-US paid a high quality dividend.

The source of the company’s cash to support the dividend paid over the last twelve months is operating cash flow (coverage of 2.81x), investing cash flow (coverage of -1.79x), issuance cash flow (coverage of 0.03x) and twelve-month prior cash (coverage of 0.50x), for a total dividend coverage of 1.57x.

MKC-US‘s issuance cash flow includes outflows from net share buybacks (coverage of -1.10x). Thus, the total coverage including share buybacks is 2.66x, which reflects our assumption that the cash paid for share buybacks is discretionary and could instead be used to pay dividends.

Dividend Coverage by Cash Flow (TTM)

These coverage ratio factors imply that the firm’s dividends are wholly paid from operating and investing cash flows net of any debt repayments, which suggests a high dividend quality.

Dividend History

Item 2012-11-30 2013-11-30 2014-11-30 2015-11-30 2016-11-30 Latest
Dividend Yield (%) 1.93 1.99 2.02 1.87 1.91 1.81
Dividend Payout (%) 41.78 47.77 44.31 52.41 47.7 48.52

A complete list of metrics and analysis is available on the company page.

Company Profile

McCormick & Co., Inc. manufactures, markets and distributes spices, seasoning mixes, condiments and other flavorful products to the retail outlets, food manufacturers and foodservice businesses. The company operates its business through the following business segments: Consumer and Industrial. The Consumer business segment operates through the following brands McCormick, Lawry’s, Zatarain’s, Simply Asia, Thai Kitchen, Ducros, Vahine, Schwartz, Club House, Kamis, Kohinoor and DaQiao. The Industrial business segment sells to food manufacturers and the foodservice industry both directly and indirectly through distributors. McCormick was founded by Willoughby M. McCormick in 1889 and is headquartered in Sparks, MD.

Disclaimer

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