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J. M. Smucker (SJM) Increases Quarterly Dividend by 12%
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The board of The J. M. Smucker Company (SJM - Free Report) has approved a quarterly dividend hike of 12.0%, thereby maintaining the trend of rewarding its shareholders consistently. The new dividend of 75 cents is up from the previous quarterly dividend of 67 cents per share. The dividend will be paid on Sep 1, 2016 to shareholders of record as of Aug 12.
Smucker has been increasing its rate of quarterly and annual dividends consistently and this dividend hike represents the fifteenth consecutive year of dividend growth. This year the rate of dividend hike is much higher than last year’s hike of 5%. In Jul 2015, the company had increased its quarterly dividend from 64 cents to 67 cents.
Apart from increasing dividends, Smucker also repurchases shares consistently. In fiscal 2016, the company reduced its total debt by nearly $750 million, reflecting strong free cash flow. The company also returned over $750 million of cash to shareholders in the form of share repurchases and dividends.
Regular dividend payments and share buybacks reflect the company’s confidence in its fundamentals. Regular share buybacks help the company reduce outstanding share count, thereby increasing earnings per share and return on equity. Apart from bolstering shareholder value, this strategic move will also lift the relatively undervalued share price.
Last month, J.M Smucker posted better-than-expected fourth quarter fiscal 2016 results, wherein both earnings and revenues beat the Zacks Consensus Estimate, primarily driven by gains from the acquisition of Big Heart Pet Brands, gains from canned milk divestiture and favorable volumes owing to lower green coffee costs. The increase was also driven by the contribution from Dunkin' Donuts K-Cup pods (launched in May 2015). Smucker licenses Dunkin’ Donuts from Dunkin’ Brands Group, Inc. .
We note that strong organic sales growth, product innovation and constant efforts to expand through acquisitions have remained Smucker’s strength. Recent acquisitions, the launch of Dunkin Donuts K-cup pods, and the expansion of distribution for the Natural Balance pet brand are fueling sales and are expected to do the same in fiscal 2017. The divestiture of its US canned milk brands and operations to Eagle Family Foods Group will allow the company to focus on key brands and growth opportunities.
Encouragingly, the Zacks Rank #1 (Strong Buy) company is witnessing growth in coffee volumes owing to further lowering of coffee price and increase from sales of Dunkin Donuts K-Cup pods.
However, currency headwinds remain a concern for Smucker. The company also remains concerned about heightened competitive activity in the pet food business.
Meanwhile, investors may also have a look at these well-ranked food stocks such as Post Holdings, Inc. (POST - Free Report) and United Natural Foods, Inc. (UNFI - Free Report) , both sporting a Zacks Rank #1.
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J. M. Smucker (SJM) Increases Quarterly Dividend by 12%
The board of The J. M. Smucker Company (SJM - Free Report) has approved a quarterly dividend hike of 12.0%, thereby maintaining the trend of rewarding its shareholders consistently. The new dividend of 75 cents is up from the previous quarterly dividend of 67 cents per share. The dividend will be paid on Sep 1, 2016 to shareholders of record as of Aug 12.
Smucker has been increasing its rate of quarterly and annual dividends consistently and this dividend hike represents the fifteenth consecutive year of dividend growth. This year the rate of dividend hike is much higher than last year’s hike of 5%. In Jul 2015, the company had increased its quarterly dividend from 64 cents to 67 cents.
Apart from increasing dividends, Smucker also repurchases shares consistently. In fiscal 2016, the company reduced its total debt by nearly $750 million, reflecting strong free cash flow. The company also returned over $750 million of cash to shareholders in the form of share repurchases and dividends.
Regular dividend payments and share buybacks reflect the company’s confidence in its fundamentals. Regular share buybacks help the company reduce outstanding share count, thereby increasing earnings per share and return on equity. Apart from bolstering shareholder value, this strategic move will also lift the relatively undervalued share price.
SMUCKER JM Price
SMUCKER JM Price | SMUCKER JM Quote
Last month, J.M Smucker posted better-than-expected fourth quarter fiscal 2016 results, wherein both earnings and revenues beat the Zacks Consensus Estimate, primarily driven by gains from the acquisition of Big Heart Pet Brands, gains from canned milk divestiture and favorable volumes owing to lower green coffee costs. The increase was also driven by the contribution from Dunkin' Donuts K-Cup pods (launched in May 2015). Smucker licenses Dunkin’ Donuts from Dunkin’ Brands Group, Inc. .
We note that strong organic sales growth, product innovation and constant efforts to expand through acquisitions have remained Smucker’s strength. Recent acquisitions, the launch of Dunkin Donuts K-cup pods, and the expansion of distribution for the Natural Balance pet brand are fueling sales and are expected to do the same in fiscal 2017. The divestiture of its US canned milk brands and operations to Eagle Family Foods Group will allow the company to focus on key brands and growth opportunities.
Encouragingly, the Zacks Rank #1 (Strong Buy) company is witnessing growth in coffee volumes owing to further lowering of coffee price and increase from sales of Dunkin Donuts K-Cup pods.
However, currency headwinds remain a concern for Smucker. The company also remains concerned about heightened competitive activity in the pet food business.
Meanwhile, investors may also have a look at these well-ranked food stocks such as Post Holdings, Inc. (POST - Free Report) and United Natural Foods, Inc. (UNFI - Free Report) , both sporting a Zacks Rank #1.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days.Click to get this free report >>