FedEx (FDX) Hits 52-Week High Driven By 25% Dividend Hike
Zacks Investment Research | Jun 12, 2017 09:37PM ET
Shares of FedEx Corporation (NYSE:FDX) scaled a 52-week high of $209.35 per share on Jun 12, 2017 after the company announced a hike in its quarterly dividend by 25%. However, the company ended the day's trading a tad lower at $209.32.
This Memphis, TN-based company raised its quarterly dividend by 25% to 50 cents a share (or $2 annually) from 40 cents (or $1.6 annually). The new dividend, which has been approved by the company’s board of directors, will be paid on Jul 6, 2017 to stockholders on record as of Jun 22. The dividend yield based on the new payout and the last closing market price is approximately 0.96%.
We believe that the raised dividend highlights FedEx’s commitment to create value for shareholders and underscores the company’s strong financial condition and bright prospects. Moreover, a look at past records reveals FedEx’s stable dividend payment history.
In fact, FedEx’s rival, United Parcel Service, Inc. (NYSE:UPS) , had also raised its quarterly dividend by 6.4% in Feb 2017. Following the hike, the company's quarterly dividend payout now is 83 cents per share ($3.32 on an annualized basis).
Needless to say, as investors prefer an income generating stock, a high dividend paying one is much coveted. To this end, investors are always on the lookout for companies that have a track record of consistent and incremental dividend payments.
Shareholder Friendly Announcement Precedes Q4 Release
We believe that the timing of dividend hike announcement has led to a surge in stock price, which is a positive. This is because FedEx is scheduled to unveil its fourth-quarter fiscal 2017 results on Jun 20.
We expect the company to perform impressively in the fiscal fourth quarter driven by its Ground unit. In fact, the company stated while releasing its fiscal third quarter results in March this year that it expects margin of more than 15% at its Ground unit.
Our quantitative model too shows that FedEx is likely to beat earnings in the fiscal fourth quarter because it has the perfect combination of two key ingredients – a positive Zacks Investment Research
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