McCormick: A Spicy Stock!

12/16/2019 5:00 am EST

Focus: CONSUMER

Jimmy Mengel

Editor, Outsider Club

McCormick & Company (MKC) provides flavorful products to the entire food industry, retail outlets, food manufacturers, and food service businesses, asserts Jimmy Mengel, editor of The Crow's Nest.

It has around $4.4 billion in annual sales. Willoughby McCormick started the business with a staff of three in 1889 when he was 25 years old. The company has quietly raised its dividend over the past 94 years. That qualifies it as a dividend champion, in a big way.

When I was living in Baltimore County during college, I used to wake up to the incredible smells of the McCormick spice factory in Hunt Valley.

Some days the air would be permeated with lemon pepper, paprika, or the classic Baltimore smell of Old Bay seasoning, perhaps the most underrated seasoning in America.

The largest portion of McCormick’s consumer business is spices, herbs, and seasonings. If you cook, you have some in your house. Here’s what’s MKC still has going for it:

* 33 years of dividend increases
* The last three increases were 10%, 10%, and 8%
* Last year’s dividend was just 30% of earnings
* Operating cash was over $800 million last year, with around $300 million going towards dividends
* Organic growth is around 5%

McCormick also acquired the Frank’s Hot Sauce and French’s condiment brands, which grow their already brand-loyal portfolio  It is a forever stock. You should own it. We’re still buying for the long haul.

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