Up to date on January thirty first, 2025 by Bob Ciura
In an effort to grow to be a Dividend Aristocrat, an organization will need to have a robust model and a dominant {industry} place. The Dividend Aristocrats are a gaggle of 69 firms within the S&P 500 Index, with 25+ consecutive years of dividend will increase.
With this in thoughts, we’ve created a listing of all 69 Dividend Aristocrats.
You’ll be able to obtain your free copy of the Dividend Aristocrats listing, together with necessary monetary metrics corresponding to price-to-earnings ratios and dividend yields, by clicking on the hyperlink under:
Disclaimer: Positive Dividend isn’t affiliated with S&P World in any method. S&P World owns and maintains The Dividend Aristocrats Index. The data on this article and downloadable spreadsheet is predicated on Positive Dividend’s personal evaluate, abstract, and evaluation of the S&P 500 Dividend Aristocrats ETF (NOBL) and different sources, and is supposed to assist particular person traders higher perceive this ETF and the index upon which it’s primarily based. Not one of the info on this article or spreadsheet is official information from S&P World. Seek the advice of S&P World for official info.
An excellent instance of a Dividend Aristocrat with an industry-leading model is client merchandise firm McCormick & Firm (MKC).
McCormick has paid dividends annually since 1925 and has elevated its dividend for 39 years in a row.
Its dividend development streak is because of its high-quality enterprise. McCormick is the worldwide chief in meals spices, seasonings, and flavors. It has grown its management place organically and likewise by means of acquisitions.
This has fueled McCormick’s dividend development for a few years.
Enterprise Overview
McCormick was shaped in 1889, when founder Willoughby M. McCormick began making flavors and extracts in his cellar, which he then offered door-to-door. At first, the enterprise grew at a gradual tempo.
In 1896, McCormick entered spices by issuing its first McCormick’s Cookbook. Over time, the corporate has steadily constructed itself into the main spices and seasonings firm on this planet.
McCormick & Firm produces, markets, and distributes seasoning mixes, spices, condiments, and different merchandise to clients within the meals {industry}.
Main manufacturers embody McCormick, Lawrys, Stubb’s, Membership Home, Ducros, Schwartz, Kamis, Kohinoor, Zatarains, Thai Kitchen, and Merely Asia.
On January twenty third, 2025, McCormick reported fourth-quarter and full year-results for the interval ending November thirtieth, 2024.
Supply: Investor Presentation
For the quarter, income grew 2.7% $1.8 billion, which was $28 million greater than anticipated. Adjusted earnings-per-share of $0.80 in contrast unfavorably to $0.85 within the prior 12 months, however this topped estimates by $0.03.
Quantity and blend improved 2.2% whereas pricing was weaker by 0.4%. The Shopper section grew 2.4% for the interval. Quantity and blend enhancements (+3.7) had been solely partially offset by pricing (-1.3%).
The Americas had natural development of three.7% as quantity good points had been offset by decrease costs. EMEA continues to carry out nicely, with gross sales larger by 2.9% as quantity and blend had been up 4.9%.
Asia/Pacific decreased 10.3% as a result of weaker leads to China. Taste Options grew 0.8% as pricing (+1.0%) was offset by decrease volumes (-0.2%). The Americas grew 1.4% as a result of higher pricing.
EMEA decreased 4.0% as demand from fast service eating places was down. Asia/Pacific returned to development as gross sales had been up 6.5% as a result of will increase in quantity associated to promotions and new merchandise.
McCormick’s gross margin expanded 20 foundation factors to 40.2% for the quarter and improved 90 foundation factors to 38.5% for the 12 months.
For the 12 months, income grew 1% to $6.7 billion whereas earnings-per-share of $2.92 in comparison with $2.52 within the prior 12 months.
Progress Prospects
Going ahead, there’s loads of room for continued development for McCormick, as a result of development within the rising markets, and likewise acquisitions.
First, worldwide development is a robust catalyst for McCormick. The gradual reopening of China following strict pandemic-related restrictions is already benefiting the corporate.
Increased demand for herbs and spices, in addition to elevated costs additionally contributed to gross sales development within the area. Individually, acquisitions are a significant a part of McCormick’s development technique.
In 2018, McCormick acquired Frank’s RedHot and French’s as a part of a $4.2 billion buy of RB Meals, the meals division of client merchandise large Reckitt Benckiser (RGBLY).
This was the biggest deal in McCormick’s historical past, and has been a significant driver of development over the previous a number of years.
Supply: Investor Presentation
McCormick has utilized its management place in {industry} to shortly increase these high manufacturers globally. Frank’s RedHot is the main scorching sauce model within the U.S., whereas French’s leads the mustard class.
The widespread theme inside McCormick’s M&A technique is that it seeks out high manufacturers that lead their respective classes, that may be simply scaled up.
This theme is evident as soon as once more with the current acquisitions of Cholula Scorching Sauce and FONA Worldwide.
First, in November 2020 McCormick acquired Cholula, the premium Mexican scorching sauce model, for $800 million. This acquisition matches completely into McCormick’s technique of buying top-quality manufacturers and shortly scaling them.
McCormick adopted this up with the December 2020 acquisition of FONA Worldwide, a number one producer of unpolluted and pure flavors with clients throughout the meals, beverage, and dietary markets.
McCormick acquired FONA Worldwide for $710 million in money.
We anticipate that the corporate’s numerous acquisitions, mixed with its personal robust manufacturers, will end in robust earnings-per-share development going ahead.
We estimate that McCormick can develop earnings at a charge of seven% per 12 months by means of fiscal 2030.
Aggressive Benefits & Recession Efficiency
The 2 most necessary aggressive benefits for McCormick are its model power and world scale. McCormick is the highest model within the world spices and seasonings {industry}, which is predicted to develop for the following 5 years.
Consequently, this provides McCormick leverage with retailers and pricing energy. These qualities assist the corporate generate constant income annually, even when the financial system enters recession.
McCormick managed to develop earnings-per-share annually over the last recession. Earnings-per-share through the Nice Recession are under:
2007 earnings-per-share of $1.92
2008 earnings-per-share of $2.14 (11% improve)
2009 earnings-per-share of $2.34 (9.3% improve)
2010 earnings-per-share of $2.65 (13% improve)
As you’ll be able to see, McCormick & Firm grew earnings-per-share yearly by means of the Nice Recession.
Not solely that, the corporate averaged double-digit annual development annually, which was extremely spectacular and a really uncommon accomplishment, even for a Dividend Aristocrat.
Valuation & Anticipated Returns
On the midpoint of full-year steerage, McCormick expects adjusted earnings-per-share of roughly $3.02 this 12 months. Consequently, the inventory trades at a ahead price-to-earnings ratio of 25.6.
That is barely above our honest worth price-to-earnings ratio of ~25.
McCormick’s valuation a number of has expanded significantly in recent times, as the corporate has turned in robust earnings development. Now, the inventory seems to be barely overvalued.
If the P/E a number of contracts to our goal P/E by 2030, the corresponding influence would cut back shareholder returns by -0.5% per 12 months over the following 5 years.
Shareholder returns may even be derived from anticipated earnings development and dividends. The corporate’s robust model and a number of catalysts for future development ought to add as much as larger EPS development as nicely.
We anticipate MKC to develop its EPS by 7% per 12 months, whereas the inventory has a 2.3% present dividend yield. Whole annual returns might attain 8.8% per 12 months over the following 5 years, making the inventory a purchase.
Ultimate Ideas
McCormick dominates the spices and seasonings class. Its robust manufacturers present the corporate with high-profit margins and development alternatives, each within the U.S. and the worldwide markets.
McCormick has a market-beating dividend yield of two.3%, and has a really robust dividend development historical past. The corporate ought to be capable of elevate the dividend annually, doubtless at a mid-to-high single-digit annual charge.
With an anticipated charge of return of 8.8% yearly going ahead, we charge the inventory a maintain.
Moreover, the next Positive Dividend databases comprise probably the most dependable dividend growers in our funding universe:
In the event you’re searching for shares with distinctive dividend traits, think about the next Positive Dividend databases:
The main home inventory market indices are one other strong useful resource for locating funding concepts. Positive Dividend compiles the next inventory market databases and updates them month-to-month:
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