McCormick Hikes Dividend by 10% Amid Strong COVID-Related Demand

Spices and condiments maker McCormick announced a 10% increase in its quarterly dividend to $0.68 per share, payable Jan. 11, 2021 to shareholders of record Dec. 31, 2020. This hike marked the 35th consecutive year of a dividend increase for the company. McCormick’s dividend yield stands at 1.35%.

McCormick (MKC) said that on a split-adjusted basis, the new quarterly dividend will be $0.34 per share. Back in September, the company announced a 2-for-1 stock split effective Dec. 1, citing “sustained positive performance and outlook for continued growth.” It has been experiencing strong demand for its products due to the rise in home dining amid the COVID-19 pandemic.

McCormick’s 3Q sales grew 7.6% year-over-year to $1.43 billion due to COVID-induced demand. Adjusted EPS increased about 5% to $1.53. The company also reinstated its FY20 guidance following the 3Q results, with it expecting sales growth at the upper end of the 4%-5% range.  

In September, Argus analyst John Staszak initiated coverage of McCormick with a Buy rating and a price target of $215. The analyst noted that the company’s “well-known brands” are preferred by retailers. Staszak feels that management’s efforts to reduce costs and improve profitability should continue to boost the company’s margins and earnings.

The analyst also believes that McCormick should be able to grow its earnings by about 7% per year over the next five years, backed by strong grocery and supermarket sales driven by increased at-home food consumption in the near-term. (See MKC stock analysis on TipRanks)

Meanwhile, the Street is cautiously optimistic on McCormick, with a Moderate Buy analyst consensus based on 2 Buys and 2 Holds. The average price target stands at $197.50 and reflects an upside potential of 7.5% from the current levels.  Shares have risen 8.2% year-to-date.  

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