Once again earnings season is upon us and that tends to be a fruitful time for dividend increase announcements, here’s this past weeks group:
||4 Yr. Payout
||4 Yr Yield
||5 Yr. CAGR
||J.M. Smucker Co.
||Duke Energy Corp.
||J.M. Smucker Co.
As a shareholder of both Ryder and JM Smucker, I appreciate their increases.
Disclosure: I own shares of Ryder and JM Smucker.
I remember a time when R, as it turns out, was an incredible buy.
It was back during the 1st or 2nd quarter of 2020. Dividend was 0.56 per quarter and the price was below $30. That’s a yield north of 7%.
It was very tempting but I never pulled the trigger. A dividend cut could not have been ruled out, IMHO. Back then, IIRC, the outlook for the business wasn’t good and there were concerns about the fleet losing its value. What was it that you saw that made you want to buy?
Whatever it was, I missed it.
A long time ago, I worked as a finance manager on a logistics business. Part of what I had to do was review the financials of our potential transportation suppliers to make sure they could handle both the size and the variability of the portion of our business they were bidding for. Ryder showed up as “one of the best houses in a bad neighborhood,” boosted by the services side of its business, rather than the direct transportation side.
At the time I was working there, ethics and policy prohibited me from investing in any supplier I was working with. After that assignment ended, that restriction went away, but I retained my positive impression of the business. As a result, when it subsequently showed up in one of my investing screens (well after my restriction ended), I was willing to buy shares.
Directly moving freight is a terribly commoditized and cyclical business. Management services for fleets is both somewhat less commoditized and has a somewhat counter-cyclical nature to it. After all, in a bad economy, it is more likely that truckers will keep vehicles longer. Longer service life frequently leads to more maintenance and repair costs, which can boost that side of Ryder’s business.
As for why I’ve held on: inertia is a powerful force, my friend, and a growing dividend certainly doesn’t hurt, either.
Disclosure: I own shares of Ryder