International Flavors & Fragrances (NYSE:IFF) announced significant increase of 20.5% in its quarterly dividends, which brought forward dividend yield to 1.9%. The company has a long history of making increases in dividends. Over the past five years, it has been able to increase its annual dividends from $1/share to its present $1.88/share. Strong growth in dividends is the result of their attractive business model, smart strategies and ability to generate steady growth in financial performance.
Recently, I recommended investors to buy and hold this stock for safe dividends and steady price appreciation. The latest increase of 20.5% in its quarterly dividends affirmed my opinion. I had predicted that with its attractive business model of offering flavors and fragrances products including the tastes in fine fragrances, unique scents, beauty care, household goods and food products, the company has also established strong footholds in the international markets, which is allowing it to make a double-digit growth in earnings. In addition, it is following a smart business expansion strategy of expanding its footprints and revenue base. The company's business strategy is based on three key points.
1. Maximizing its portfolio
2. Strengthening its innovation platform
3. Expanding geographic reach
Its management is actively working on its business strategy as the company is poised to generate 13% growth in its earnings for the full year. Moreover, close collaboration with customers is allowing it to launch innovative products. The company has also been expanding its geographic footprints with acquisitions. It had recently made a number of acquisitions including the acquisition of Israel based Aroma Flavors and Fragrances company to strengthen its Fragrances Ingredients business. Overall, International Flavors & Fragrances is in a strong cash position and its cash flows are expanding with the consistent growth in earnings.
After the latest dividend announcement, I am also predicting steady growth in earnings for the next year. I believe that the growth in the global economy and population will continue to enlarge demand for specialty chemicals. And, International Flavors & Fragrances has established strong footholds for its future growth. Its fundamentals are also moving nicely based on trailing price to earnings ratio of 21 and forward price to earnings ratio of 19. I recommend investors to hold this stock for safe dividends and steady price appreciation.
Disclosure: The author has no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
The author wrote this article themselves, and it expresses their own opinions. The author is not receiving compensation for it (other than from Seeking Alpha). The author has no business relationship with any company whose stock is mentioned in this article.