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Fortune Brands' Board Okays 9% Hike in Quarterly Dividend Rate

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Fortune Brands Home & Security, Inc. yesterday announced that it is rewarding shareholders in the form of a hike in the quarterly dividend rate. The increment marks the company’s 7th consecutive year of a dividend rate increase.

We believe that such shareholder-friendly policies reflect its strong cash position and commitment toward returning high value to shareholders.

Inside the Headlines

As revealed, Fortune Brands’ board of directors approved a hike of 9% or 2 cents per share in the quarterly dividend rate, which now moved from 22 cents to 24 cents. On an annualized basis, the dividend increased to 96 cents per share from 88 cents.

Fortune Brands will pay the revised quarterly dividend on Mar 18, 2020, to shareholders of record as of Feb 28.

Sound Shareholder-Friendly Policies

The company firmly believes in rewarding shareholders handsomely through dividend payments. Its cash dividend payout increased from 64 cents per share in 2016 to 80 cents in 2018. In December 2018, it raised the quarterly dividend rate by 10%.

Further, the company paid out a cash dividend of $92.3 million to its shareholders in the first nine months of 2019.

Earnings Projections and Price Performance

With a market capitalization of $8.9 billion, Fortune Brands currently carries a Zacks Rank #3 (Hold). The company is poised to gain from inorganic growth strategies, policy of rewarding shareholders handsomely, and strengthening Doors & Security as well as Plumbing segments. However, cost inflation, high debts and weakness in Canada operations might be detrimental.

For 2019, the company anticipates 5-6% sales growth, down from the previously mentioned increase of 5.5-6.5%. Earnings (before charges/gains) are predicted to be $3.53-$3.63 per share versus $3.53-$3.67 stated previously.

Earnings estimates for Fortune Brands have been lowered in the past 60 days. Currently, the Zacks Consensus Estimate for earnings is pegged at $3.58 for 2019 and $3.94 for 2020, reflecting declines of 0.6% and 0.3% from the respective 60-day-ago figures.

Fortune Brands Home & Security, Inc. Price and Consensus

 

Fortune Brands Home & Security, Inc. Price and Consensus

Fortune Brands Home & Security, Inc. price-consensus-chart | Fortune Brands Home & Security, Inc. Quote

In the past three months, the company’s stock price has increased 18% compared with the industry’s growth of 5.2%.




Stocks to Consider

Some better-ranked stocks in the industry are Allegion plc (ALLE - Free Report) , Brady Corporation (BRC - Free Report) and NAPCO Security Technologies, Inc (NSSC - Free Report) . All these stocks currently carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

In the past 60 days, earnings estimates for Allegion and Brady have improved for the current year, while the same has been unchanged for NAPCO Security. Further, positive earnings surprise for the last reported quarter was 10.53% for Allegion, 9.38% for Brady and 21.43% for NAPCO Security.

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