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Three S&P 500 and Dow Industrial Companies Report Dividend Growth and Buyback Extensions

December 27, 2013 | About:
Monica Wolfe

Monica Wolfe

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Howard Silverblatt, a senior index analyst at S&P Dow Jones Indices, reports that despite increasing shareholder returns finding worthwhile investment options is difficult because “what remains weak is commitment:  commitment to the economy, commitment to higher production, and commitment to new hiring.” 

Over the past week three companies featured in the S&P 500 as well as the Dow industrial sector reported notable dividend hikes as well as big buyback extensions.  These companies consist of Boeing (BA), 3M (MMM) and Pfizer (PFE).

Boeing (BA)

Last week Boeing, the world’s largest builder of commercial jets, announced a 50% dividend hike along with a $10 billion stock-buyback program that is to take place over the next two to three years.  The quarterly cash distribution will jump from $0.485 per share to $0.73 per share.  Ultimately this dividend hike means an additional $736.5 million for the company’s investors annually. 

Boeing has offered its shareholders uninterrupted quarterly dividends since 1942. 

According to the GuruFocus Dividend page, the company’s dividend growth rate is as follows:

  • 1-year:  8.90%
  • 3-year:  1.60%
  • 5-year:  1.90%
  • 10-year:  11.40%

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As of the third quarter Boeing had $15.9 billion in cash and approximately $9.5 billion in debt.  It also recently announced that it would be investing a significant amount into its two new plane outfits:  the 737 MAX and the wide-bodied 777X.

Boeing is engaged in the design, development, manufacture, sale and support of commercial jetliners, military aircraft, satellites, missile defense, human space flight and launch systems and services.  The company is also a manufacturer of passenger airplanes for the worldwide commercial airline industry.

Boeing’s historical revenue and net income:

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The company is currently trading just off its 52-week high of $142 which was set on Nov. 18, and representing a dividend yield of 2.10%

The Peter Lynch Chart suggests that the company is currently overvalued:

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Boeing has a market cap of $103.9 billion.  Its shares are currently trading at around $138.27 with a P/E ratio of 24.50, a P/S ratio of 1.25 and a P/B ratio of 11.70.  The company had an annual average earnings growth of 12.20% over the past ten years.

GuruFocus rated Boeing the business predictability rank of 3-star.

Pfizer (PFE)

This past week pharmaceutical company Pfizer upped its dividend a notable 8% to $0.26 per share.  This most recent jump brought the dividend up from $0.24 last quarter, and sets the dividend yield at 3.4%.  Pfizer has offered its shareholders quarterly cash distributions since 1901 without missing a quarter and this most recent increase is also the company’s fifth consecutive yearly increase.  This dividend hike adds an additional $518.5 million in cash payouts.

Pfizer has also been very rewarding with its stock repurchase program.  From January through November 2013 the company has repurchased about $13.1 billion work of its shares outstanding.

According to the GuruFocus Dividend page, the company’s dividend growth rate is as follows:

  • 1-year:  9.30%
  • 3-year:  3.20%
  • 5-year:  -7.20%
  • 10-year:  2.70%

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This dividend represents the 301st consecutive quarterly dividend paid by Pfizer.

Pfizer is a global pharmaceutical firm which develops and produces medicines and vaccines for a range of conditions which include areas of immunology, inflammation, oncology, cardiovascular and metabolic diseases, neuroscience and pain.

Pfizer’s historical revenue and net income:

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The company announced in July that it would be splitting the massive company into three completely distinct segments:  drugs with patent exclusivities beyond 2015; vaccines, oncology agents and consumer health care; and mature drugs and joint-venture products. Analysts believe that this split could eventually lead into Pfizer pulled into three companies.

The company recently acquired Polocard, which is Poland’s leading over-the-counter heart attack prevention medication.

The Peter Lynch Chart suggests that the company is currently undervalued:

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Pfizer has a market cap of $196.7 billion. Its shares are currently trading at around $30.35 per share with a P/E ratio of 8.40, a P/S ratio of 3.84 and a P/B ratio of 2.60. The company’s dividend yield is currently at 3.16 and it has seen annual average earnings growth of 6.30% over the past ten years.

GuruFocus rated the Pfizer the business predictability rank of 3-star.

3M (MMM)

The last S&P 500 company reporting a dividend hike was in 3M.  The company upped its quarterly common distribution by 35% to $0.855 per share, up from $0.635 per share last quarter.  This is the second dividend increase this year, as there was an 8% increase reported in February.  This most recent increase represents an additional $592.5 million for shareholders of 3M.  The company’s dividend is currently at 2.5%. 

This newest quarterly dividend represents the 55th consecutive year of dividend hikes and the cash payments have been continuous since 1916. 

Along with the dividend increase, the company also upped the ante in their share repurchase program.  The company previously stated that they would spend $7.5 billion to $15 billion on stock buybacks through the year 2017.  But recently 3M announced that it would be spending $17 billion to $22 billion on the stock repurchases.

According to the GuruFocus Dividend page, the company’s dividend growth rate is as follows:

  • 1-year:  7.50%
  • 3-year:  5.00%
  • 5-year:  4.20%
  • 10-year:  6.00%

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3M is a manufacturing, technology innovator and marketer of a variety of products. It is a technology company with a presence in the six businesses: Industrial and Transportation; Health Care; Consumer and Office; Safety, Security and Protection Services; Display and Graphics; and Electro and Communications.

3M’s historical revenue and net income:

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The analysis on 3M reports that the company’s dividend yield is at a 5-year low, its price is near a 10-year high and it has shown predictable revenue and earnings growth.

The Peter Lynch Chart suggests that the company is currently overvalued:

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3M has a market cap of $84.92 billion. Its shares are currently trading at around $126.13 with a P/E ratio of 19.40 and a P/S ratio of 2.90. 3M had an annual average earnings growth of 6% over the past ten years.

GuruFocus rated 3M the business predictability rank of 2.5-star.


Rating: 3.0/5 (4 votes)

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