Pinnacle Foods Boosts Shareholders Value With Dividend Hike

Pinnacle Foods Inc. (NYSE:PF) maintains its commitment to enhance shareholders’ value through dividend payouts. Recently, management has approved a quarterly dividend hike of 14% to 32.50 cents per share from the previous payout of 28.50 cents.

Effective third-quarter 2017, the new dividend will be paid on Oct 9, to shareholders of record as on Aug 29, 2017. This brings the company’s annualized dividend to $1.30 per share, representing an increase from the previous annualized rate of $1.14 per share.

Notably, this was the fifth dividend hike by Pinnacle Foods since the initiation of its quarterly dividend program shortly after its IPO in March 2013. The last dividend hike of 12% to 28.50 cents per share was announced in August 2016.

Dividend hike is frequent among companies with a stable cash position and healthy cash flows. We believe that such hikes not only enhance shareholders’ return but raise the market value of the stock as well. Basically, through these dividend increases companies persuade investors to either buy or hold the scrip instead of selling it.

Apart from Pinnacle Foods, companies like The J. M. Smucker Company (NYSE:SJM) and Papa John's International, Inc. (NASDAQ:PZZA) have also raised their dividends by 4% to 78 cents and 12.5% to 22.50 cents per share, respectively.

Another company that remains keen on rewarding shareholders through share repurchases and dividend payments is Colgate-Palmolive Company (NYSE:CL) since 1895. Keeping up with this trend, the company hiked quarterly dividend by 3% to 40 cents in March, compared with the previous payout of 39 cents per share.

However, following the dividend hike announcement, very less movement was noticed in the Pinnacle Foods' shares yesterday. Shares of this manufacturer and distributor of branded food products have inched up a meager 1% yesterday. Nonetheless, the stock has rallied 10.4% in the last six months against the industry’s decline of 4.3%. Currently, the industry is placed at the bottom 21% of the Zacks classified industries (203 out of 256).

Pinnacle Foods boasts a strong brands portfolio, and also make acquisitions to grow its distribution network as well as customer base. Further, it has an operational excellence program to generate annual productivity savings across the supply chain, which remains encouraging.

In July, Pinnacle Foods posted mixed second-quarter 2017 results. While the bottom line outpaced the Zacks Consensus Estimate, top line missed the same. With this, the company’s earnings have outperformed the consensus mark in seven of the trailing nine quarters. Currently, Pinnacle Foods carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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