DuPont (DD) - The Miracle of Dividends

Chemicals giant and Dow bellweather DuPont (DD) has an enviable dividend track record, and is seeing a strong recovery throughout the globe. It also sits on a dividend yield greater than 4%.

If investors ever needed a sign that the global economy was rebounding, they received it in the form of some high quality second quarter earnings results from chemicals group DuPont (DD). The chemicals giant sits on a 4.07% dividend yield.
 
Earnings for the quarter tripled to $1.26 per share, compared to $0.46 per share in the prior year with sales surging 26% to $8.6 billion.
 
In a further show of confidence, management at the company upped its full year earnings guidance, predicting earnings of $2.90 to $3.05 per share from $2.50 to $2.70 per share previously, which represents a 14% jump.
 
Sales grew in every segment. Several businesses, including electronics and titanium dioxide, delivered results that far exceeded pre-recession levels. The company continued to meet its productivity and cost-control targets, and remained highly disciplined in creating operating leverage to aid future growth. The company is expected to continue to be cash generative and full year free cash flow would be greater than $1.7 billion.
 
DuPont (DD) has a fabulous track record, and this should not be ignored by investors as it gives clues to a business which understands long-term sustainability coupled with earnings and dividend growth.
 
Founded in 1802, the chemical giant has evolved into one of the most recognizable companies listed on international exchanges. It has expertise in a variety of fields and industries including manufacturing, agriculture and food, building and construction, electronics and communications. In many of these sectors DuPont (DD) has its own proprietary technology and holds market-leading positions.
 
For DuPont the company pay-off line is "The miracle of science" but for investors it could well be said that DuPont (DD) reflects the miracle of dividends.
 
Trading on a dividend yield of over 4%, the most recently declared July dividend was the 424th consecutive quarterly dividend since the company first paid a dividend in the fourth quarter of 1904. There are few records in international capitalism that can match that of DuPont (DD).
 
While DuPont (DD) shareholders have had a nice run-up since March with the share rising from around $32 to over $40 a share, the company trades on an undemanding forward price to earnings multiple of around 12 times earnings. Management has certainly proved its mettle in tough trading conditions. A handy dividend yield coming through for stockholders means the history and consistency of earnings and dividend generation proves a compelling case for the inclusion of DuPont (DD) in any conservative dividend-seeking investor’s portfolio.

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