J.M. Smucker: Another Dividend Growth Stock

Includes: PG, SJM
by: David I. Templeton, CFA
Today, The J. M. Smucker Co. (NYSE:SJM) announced a 9.38% increase in the company's quarterly dividend. I am highlighting the stock due to its connection to Procter & Gamble (NYSE:PG). In the 4th quarter of 2008, SJM acquired Procter & Gamble's Folgers coffee business. Around that same time, Standard & Poor's added SJM to the S&P 500 Index.

Smucker does not technically meet my definition of a dividend growth stock since the company has not maintained uninterrupted dividend growth over the course of the past 10 years. SJM went from June 2000 through June 2002 without increasing the dividend. On the other hand, over the course of the last five years, the company has grown the dividend just under 7% per year.
  • The most recent announcement has the company increasing the quarterly dividend to 35 cents per share payable June 2009 versus 32 cents per share in the same quarter last year.
  • The projected payout ratio is approximately 41% based on estimated April 2010 year end earnings of $3.36 per share. The 5-year average payout ratio is 38%.
  • The company has a S&P Earnings & Dividend Ranking of A+

J. M. Smucker dividend analysis table April 2009Click to enlarge:

J. M. Smucker stock chart April 2009