Printing a Consistent Dividend - RR Donnelly & Sons (RRD)

The printing business was hard hit by the economic recession of 2008. Coupled with strong headwinds from the digital revolution, what does a company like RR Donnelly & Sons (RRD) have to offer? Well, a 5.7% dividend yield for a start.

Over the last decade the world has been promised a "paperless" office, but a glance around almost any corporate workplace at the moment will show that not much progress has been made. Despite all it’s headwinds due to the advent of the internet and the digital revolution, printing remains big business.
 
One of the world leaders in the sector is RR Donnelley & Sons (RRD). The company not only dominates in which it operates, but also sits on a 5.7% dividend yield, which is way above the average of the S&P 500.
 
Established more than 145 years ago, RR Donnelley & Sons (RRD) services more than 60,000 customers on four different continents with a variety of hard-copy printing and online offerings.
 
Reporting first quarter earnings in May 2010 the company said that earnings per share had risen to $0.25 from $0.07 in the first quarter of 2009 on net sales of $2.4 billion. That’s a 257% leap.
 
"We are very pleased with our first-quarter results. The benefits of our diverse product offerings and the actions taken to improve our cost structure have driven our higher operating margins," said Thomas J. Quinlan III, RR Donnelley's (RRD) President and Chief Executive Officer. The business is very diversified in the printing arena and after the destruction of 2008 managed to raise operating and net margins.
 
The company is also upbeat about the outlook, commenting in the latest quarterly results: "While the economic outlook remains uncertain, we approach the balance of the year with tempered enthusiasm. For the full year, we continue to expect revenue growth, excluding acquisitions, in the low single digits, and operating cash flow less capital expenditures in the range of $600 million to $650 million. This expectation is in line with our proven ability to achieve consistent cash flow, as reflected by the nearly $4.2 billion in operating cash flow less capital expenditures generated since the beginning of 2004."
 
Apart from paying down debt ($800m in the last financial year), the company also has a strong focus on returning cash to stakeholders. Since 2004 RR Donnelley & Sons (RRD) has returned approximately $3.2 billion to investors.
 
While many of its key customer industries were hit hard during the recession, management at RR Donnelley & Sons (RRD) have indicated that the economy is rebounding and investors seeking out an attractive dividend yield may well consider this stock for their portfolio.
 
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