McCormick Ups Dividend by 11%

In order to return value to its shareholders, McCormick & Company ( MKC - Analyst Report ) has raised its dividend by 3 cents to 31 cents a share.

The new dividend is payable on January 13, 2012, to shareholders of record at the close of business on December 30, 2011. McCormick, a global leader in flavor, has successively increased its dividend 26 times.

In the recently concluded third-quarter, McCormick generated $85.7 million of cash from operations. It was, however, lower from the prior levels on account of increases in inventory. About $58.8 million of capital expenditure were incurred during the quarter.

Cash and cash equivalents were $52.2 million at the end of August 31, 2011, while long-term debt was $1.03 billion.

Like McCormick, the world’s leading retail of food and related goods retailer Sysco Corporation ( SYY - Snapshot Report ) has raised its dividend by a penny to 27 cents a share on November 20 and announced a share repurchase program of 20 million common shares. The new dividend is payable on January 27, 2012, to common shareholders of record at the close of business on January 6, 2012.

McCormick, which manufactures, markets and distributes spices, seasoning mixes, condiments and other flavorful products to the entire food industry, posted third-quarter 2011 operating earnings of 69 cents a share on September 28, surpassing the Zacks Consensus Estimate of 64 cents, benefiting from higher operating income, as well as cost savings from Comprehensive Continuous Improvement initiatives.

Further, new product innovation, distribution gains and increased investment in brand marketing also led to the growth. Management reaffirmed its fiscal 2011 earnings per share guidance in the range of $2.74 to $2.79, including the impact of the acquisitions and the joint venture. Sales are expected to grow 6 to 8% in local currency, with the sales impact from favorable currency exchange rates at 2%.

McCormick, which competes with ConAgra Foods, Inc. ( CAG - Analyst Report ) and Kraft Foods Inc. ( ) currently holds a Zacks #3 Rank translating into a short-term ‘Neutral’ rating. Over the long term, we provide a Neutral recommendation on the stock.