As expected, last week wasn't a banner period for dividend raises. Yet it's been a banner year for hikes. So, in true 2017 form, there were still a few stray companies boosting their payouts.
Three of those outliers were the following:
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Darden Restaurants
Consider it an extra helping of cash. Darden Restaurants (DRI -0.45%), operator of Olive Garden and LongHorn Steakhouse, among other chains, is lifting its quarterly dividend by nearly 13% to $0.63 per share.
The new payout was announced concurrent with Darden's fourth-quarter and fiscal 2017 financial results, which showed encouraging growth in several of the company's fundamentals.
For the quarter, same-restaurant sales rose by 3% on a year-over-year basis, feeding 8% revenue growth (to just over $1.9 billion), and a 9% increase in adjusted net profit to $194 million. In other words, Darden is doing a good job bucking the overall downward trend in the U.S. restaurant industry.
That uptick in profitability is having a positive effect on both operating and free cash flow. In fiscal 2017, both rose from the previous year, with the latter coming in at nearly $603 million. As in 2016, that was far more than enough to cover the dividend payouts and a fairly active share buyback program. There's plenty of room for a generous dividend raise, so I wouldn't worry about the immediate future of this payout.
DRI Free Cash Flow (TTM) data by YCharts.
Darden Restaurants' upcoming distribution will be handed out on Aug. 1 to stockholders of record as of July 10. At the current share price, it would yield 2.8%, comfortably above the present 1.9% of dividend-paying stocks on the S&P 500.
General Mills
Frequent dividend raiser General Mills (GIS 0.85%) is at it again; for the third time since the beginning of 2016, it's increasing its quarterly payout. The maker of cereals and other comestibles will pay $0.49 per share, $0.01 or 2% higher than its previous amount.
The dividend is going in the opposite direction of the company's top line, however. General Mills' net sales in Q4 fell on a year-over-year basis for the eighth time in a row. It dropped by 3% to $3.8 billion, on the back of a 7% decline in overall volume. Fortunately, thanks to a slight drop in costs, net income actually grew by 8%, to almost $409 million.
General Mills' cash flow figures followed the dynamic of sales, with the full-year 2017 numbers slipping compared to the previous year. Free cash flow was 14% lower, at $1.6 billion, which wasn't enough to cover the nearly $2.7 billion in dividend payouts and share buybacks for the year.
That isn't necessarily a reason for income investors to avoid the stock -- somehow, the company always finds a way to finance its modest dividend increases. Still, some concern and caution is warranted in this case.
GIS Dividend data by YCharts.
As with Darden Restaurants, the next General Mills dividend is to be paid on Aug. 1 to shareholders of record as of July 10. It yields a theoretical 3.6% on the current stock price.
Worthington Industries
Metals manufacturing company Worthington Industries (WOR -1.53%) has decided to add a little steel to its quarterly dividend. It's raising it incrementally by $0.01, or 5%, to $0.21 per share. Although that isn't a substantial raise, it keeps the company consistent -- it'll be the 199th straight quarterly payout it's distributed since going public way back in 1968.
The dividend raise was declared the same day as Worthington reported its Q4 and fiscal 2017 results, some of which were quite impressive. Net sales for both periods were up substantially; the quarter saw a top-line increase of 20%, to $845 million, while the annual result was 7% higher at $3.01 billion. Quarterly net profit slipped marginally to $56.5 million, but still beat the average analyst estimate.
For the year, the company's key cash flow figures declined more steeply, with FCF falling to $267 million from the 2016 figure of almost $311 million. Yet on a historical basis, that former number is still fairly high for Worthington, and last year it was far more than enough to cover spending on dividends and stock repurchases. As such, I think this distribution is clearly sustainable for now.
WOR Free Cash Flow (TTM) data by YCharts.
Worthington's upcoming dividend will be dispensed on Sept. 29 to investors of record as of Sept. 15. At the most recent closing stock price, the new payout would yield 1.7%.
