With its stock on the rise and earnings strong, McCormick & Co. said yesterday that it would increase its dividend for the eighth time in less than four years and split its shares 2-for-1.
The Sparks-based spice company said the new dividend would be set at a Dec. 16 meeting of directors. Both the additional share of stock and the cash dividend are payable Jan. 17 to stockholders of record Dec. 31, the company said.
For McCormick shareholders, the increased dividend has become a semiannual ritual over the past few years. Since the start of 1988, the dividend has been increased at regular six-month intervals, climbing to the current payout of 15 cents a share from 6.25 cents, restated to adjust for splits.
The stock split was the third since April 1988.
"Their stock has obviously done very well this year, and this split is a reflection of their optimism for the future," said Steven A. Rockwell, an analyst at Alex. Brown & Sons.
The company, which has about 40 million common shares outstanding, said that the moves would apply to both its 7 million shares of voting stock and 33 million non-voting shares. It is the non-voting stock that is listed as MCCRK in the NASDAQ system.
McCormick, following the broader market decline yesterday, closed at $41.75 a share, down $1.
Donald A. Palumbo, McCormick's vice president and treasurer, said the dividend increase came as part of the company's expressed plan to pay out between 25 percent and 35 percent of net income to shareholders. The company earned $20.8 million, or 50 cents a share, during the third quarter, which ended Aug. 31. McCormick had net income of $17.9 million, or 43 cents a share, in the corresponding part oflast year.
Although the third-quarter profit was smaller than many analysts had expected, the results continued a strong nine months of earnings at the company. McCormick's stock price has also performed well, roughly doubling in the past year.
Mr. Palumbo said that the stock split was intended to keep the stock price at a level that would be easily affordable to individual investors and employees.