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Service Corporation (SCI) Rewards Investors With Dividend Hike

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Service Corporation International (SCI - Free Report) is focused on enhancing shareholders’ returns. The largest provider of deathcare products and services in North America announced a dividend hike. It will now pay a quarterly dividend of 23 cents per share, up 9.5% from the prior rate of 21 cents. The hiked dividend will be paid out on Sep 30, 2021, to shareholders of record as of Sep 15.

Service Corporation currently has a dividend payout of 20.2%, a dividend yield of 1.3% and free cash flow yield of 6.6%. With an annual free cash flow return on investment of 13.6% the increased dividend is likely to be sustainable. Dividend payouts are one of the biggest enticements for investors and Service Corporation is committed toward boosting shareholders’ value.

Apart from this, Service Corporation has been focused on making share buybacks. During the second quarter of 2021, the company spent $116 million toward dividend and share buybacks, including dividends worth nearly $35 million

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What Else Should You Know?

Service Corporation has been benefiting from strength in the Cemetery segment for the past few quarters. During the second quarter, Cemetery revenues rose 34.4% to $455.8 million, thanks to increased core revenues. Core revenues gained from an increase in both atneed and total recognized preneed revenues. Comparable Cemetery revenues rallied 34.4% year over year on the back of higher core revenues. This, in turn, was fueled by elevated recognized preneed revenues owing to solid comparable preneed cemetery property sales production. Growth in atneed revenues, which stemmed from a rise in burials performed, was an upside.

Comparable preneed cemetery sales production ascended 35.6% owing to growth in large sales activity, sales averages and sales velocity. The company continued to gain from an efficient sales force, prudent utilization of customer relationship management system as well as improved conversion rates from direct mail and digital lead campaigns. Management continued to witness elevated conversion and close rates, thanks to customers’ greater awareness of the possible effects of coronavirus.

Service Corporation remains committed toward building new funeral homes to generate greater returns. In the second quarter, the company incurred capital expenditures of $60.9 million. The company undertook several cemetery development and construction projects. These investments are touted to be accretive to the company in the near term. Expenditures associated with capital enhancements at current locations and cemetery development are anticipated in the band of $235-$255 million in 2021.

Shares of the Zacks Rank #2 (Buy) company have rallied 31.7% in the year-to-date period compared with the industry’s growth of 25.7%.

Other Solid Staple Bets

Carriage Services, Inc. (CSV - Free Report) , with a Zacks Rank #2, has a long-term earnings growth rate of 15%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Hillenbrand, Inc. (HI - Free Report) , with a Zacks Rank #2, has a long-term earnings growth rate of 12%.

Pilgrim’s Pride Corporation (PPC - Free Report) , carrying a Zacks Rank #2, has a long-term earnings growth rate of 31%.

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