Updated 3/11/25
McCormick & Company (NYSE: MKC) is a familiar name to anyone who enjoys cooking. As a global leader in spices, seasonings, and flavorings, the company has built a strong business that delivers consistent results. Whether it’s a home chef adding a pinch of spice or a large restaurant chain perfecting its recipes, McCormick plays a role in how food tastes worldwide.
For dividend investors, this stock has been a steady performer for decades. Its predictable cash flow, long history of dividend increases, and recession-resistant nature make it a compelling choice. While growth has slowed recently, McCormick remains a well-managed company that prioritizes returning value to shareholders. Let’s dive into what makes this dividend stock stand out.
Key Dividend Metrics
📌 Dividend Yield: 2.14%
📌 Annual Dividend: $1.80 per share
📌 5-Year Average Dividend Yield: 1.76%
📌 Dividend Growth Streak: Over 30 years
📌 Payout Ratio: 57.53%
📌 Ex-Dividend Date: December 30, 2024
📌 Next Dividend Payment: January 13, 2025
Dividend Overview
McCormick has a long track record of rewarding shareholders with reliable dividend payments. The company currently offers a 2.14% yield, which is slightly higher than its five-year average of 1.76%. That’s a good sign, as it suggests the stock is trading at a better valuation compared to recent years.
The payout ratio of 57.53% is healthy, meaning the company is paying out a reasonable portion of its earnings while still retaining enough to reinvest in the business. This balance is key for dividend growth over the long term.
One of the most impressive aspects of McCormick’s dividend is its consistency. The company has increased its payout every year for over three decades, earning it the title of Dividend Aristocrat. For investors looking for dependable income, that kind of track record is hard to ignore.
Dividend Growth and Safety
McCormick has steadily increased its dividend over the years, with an average annual growth rate of around 9% over the past decade. While recent hikes have been more modest, the company remains committed to rewarding shareholders.
Is the Dividend Secure?
✔ Strong Cash Flow: The company’s operating cash flow stands at $921.9 million, comfortably covering its dividend obligations.
✔ Earnings Support: With $788.5 million in net income, McCormick has the financial strength to continue increasing payouts.
✔ Recession-Resistant Business: Demand for spices and seasonings remains steady, even during economic downturns, helping to protect McCormick’s revenue.
One area to keep an eye on is McCormick’s debt levels. The company carries $4.6 billion in total debt, with a debt-to-equity ratio of 86.56%. While not a red flag yet, it’s something investors should monitor, especially in a high-interest-rate environment.
Chart Analysis
Trend and Moving Averages
The price action for McCormick & Company (MKC) shows a strong uptrend over the past few months. The stock is currently trading above both the 50-day and 200-day moving averages, which is generally a bullish signal. The 50-day moving average (orange line) crossed above the 200-day moving average (blue line) earlier, confirming a trend reversal from a prior downtrend. This type of crossover often indicates a shift in momentum, attracting more buyers into the stock.
The most recent price action suggests that the stock is consolidating near its highs, with some resistance in the mid-$80s range. While the longer-term trend remains positive, short-term fluctuations could occur if the stock struggles to break through this resistance level.
Volume and Market Participation
Volume has been fairly steady, with occasional spikes on days of strong price movement. Recently, volume increased along with price appreciation, which suggests buying pressure is still present. When volume supports upward moves, it often indicates that institutions or larger investors are participating in the rally.
However, compared to some of the more significant spikes seen earlier in the chart, the most recent volume increase is not extreme. If volume starts to taper off while the stock remains near its highs, it could signal some hesitation from buyers.
Relative Strength Index (RSI)
The RSI indicator is hovering in the upper range but not yet in overbought territory. This suggests the stock has room to move higher, but if RSI creeps closer to the 80 level, it could indicate that buying momentum is becoming overstretched.
Throughout the past several months, RSI has steadily climbed alongside price, showing healthy momentum. A slight pullback in RSI or consolidation in price wouldn’t necessarily be a negative sign but rather a normal phase in an uptrend.
Recent Price Action and Candlestick Behavior
The last few candles show some choppiness, with both upper and lower wicks forming on several daily candles. This indicates that buyers and sellers are actively testing different price levels. The recent high of 84.38 suggests there is resistance in this area, and the stock will need strong buying interest to push through.
The closing price of 82.95 is still holding above key support levels, but any breakdown below the 50-day moving average could signal short-term weakness. If the price continues consolidating, traders will be watching for a breakout above the recent highs or a potential retracement back to the moving averages.
Analyst Ratings
Recent Upgrades
📈 In early January 2025, TD Cowen upgraded McCormick & Company from “Hold” to “Buy,” raising the price target to $90. This decision was influenced by the company’s strong market position and anticipated growth in the flavoring industry.
📊 In December 2024, Jefferies Financial Group also adjusted its rating from “Hold” to “Buy,” increasing the price target to $91. Analysts pointed to McCormick’s ability to manage supply chain challenges effectively while maintaining a solid product portfolio.
Recent Downgrades
📉 In late January 2025, JPMorgan Chase & Co. downgraded McCormick from “Neutral” to “Underweight,” setting a price target of $69. Concerns were raised over valuation metrics and the potential for margin pressure due to rising input costs.
⚖️ Barclays maintained its “Equal Weight” rating but lowered the price target to $82, citing caution around McCormick’s near-term growth prospects in a competitive market environment.
Consensus Price Target
📍 The average analyst price target for McCormick & Company currently stands at approximately $83.75, reflecting a mix of optimism and caution regarding the company’s valuation and future performance.
Earning Report Summary
McCormick & Company recently shared its latest earnings, and the numbers paint an interesting picture. The company saw a 3% boost in sales for the fourth quarter, bringing in $1.8 billion compared to last year. This growth was mainly thanks to an increase in product volume, though some pricing adjustments slightly held it back.
The consumer segment was the standout, with sales rising 4% to $1.085 billion. People continue to reach for McCormick’s seasonings and spices, driving demand higher. The flavor solutions segment, which supplies flavors to restaurants and food manufacturers, grew by 1% to $713 million. Pricing strategies helped balance out lower volume in some areas.
When it comes to profits, the company reported $306 million in operating income for the quarter, a small increase from last year. However, after adjusting for one-time costs, operating income dipped slightly. The reason? Higher expenses in marketing and general operations, which cut into the bottom line despite better gross margins.
Earnings per share came in at $0.80, down just a bit from last year’s $0.81. On an adjusted basis, EPS slipped even further to $0.80 from $0.85, with tax rates and operating expenses playing a role in the decline.
For the full year, McCormick pulled in $6.724 billion in sales, marking 1% growth overall. That may not be a huge jump, but considering economic uncertainty, the company still managed to expand. Gross profit improved by $89 million, with cost-saving efforts and smart pricing helping McCormick squeeze out better margins.
Operating income for the year landed at $1.06 billion, up from $963 million the previous year. Adjusted operating income saw a 5% bump, showing that despite rising expenses, McCormick is still finding ways to improve profitability. Earnings per share for the year ended at $2.92, with adjusted EPS at $2.95, both up from the prior year. A strong performance from international operations, particularly in Mexico, played a big role in the increase.
One thing investors will be happy about: McCormick raised its dividend by 7% in November, marking an impressive 39 straight years of increases. That’s a clear sign of confidence in the company’s ability to generate steady cash flow.
Looking ahead to 2025, McCormick expects flat to 2% sales growth. That’s not a huge number, but it makes sense given some market challenges and planned increases in marketing spending. Profit growth is expected to land between 3% and 5%, slightly below some analyst forecasts. Even so, the company is staying focused on long-term growth, betting on continued demand for its products worldwide.
Financial Health and Stability
McCormick generates $6.72 billion in annual revenue, with a profit margin of 11.73% and an operating margin of 17.24%. These numbers reflect strong profitability, though growth has slowed compared to previous years.
✔ Return on Equity (ROE) of 15.16% shows that the company is efficiently using shareholder capital.
✔ Return on Assets (ROA) of 5.2% is on the lower side but reasonable for a well-established consumer goods company.
✔ Current Ratio of 0.74 suggests that short-term liquidity is a bit tight, though consistent cash flows help offset this concern.
One potential challenge is that quarterly earnings declined by 1.9% year-over-year. While not a major issue, it does highlight the pressure McCormick is facing from inflation and competition. Management will need to navigate these challenges carefully to maintain long-term stability.
Valuation and Stock Performance
At $83.90 per share, McCormick trades at a price-to-earnings (P/E) ratio of 28.83 on a trailing basis and 26.67 forward P/E. Historically, the stock has commanded a premium valuation, often exceeding a P/E of 30.
✔ Price-to-Sales Ratio of 3.38 indicates that investors are still willing to pay a premium for McCormick’s brand strength.
✔ Price-to-Book Ratio of 4.27 is on the higher side, which is common for strong consumer brands.
✔ PEG Ratio of 2.83 suggests that future earnings growth may not be enough to justify a significantly higher valuation.
From a trading perspective, McCormick is sitting near its 52-week high of $86.24, which could indicate that some near-term upside is limited. However, the stock is above both its 50-day ($77.37) and 200-day ($76.94) moving averages, a sign of positive momentum.
Risks and Considerations
While McCormick is a solid dividend stock, there are some potential risks investors should be aware of:
🚨 High Debt Levels – With $4.6 billion in total debt, McCormick has a sizable financial obligation. If interest rates remain high, debt servicing could become more expensive.
🚨 Slowing Growth – Quarterly earnings fell 1.9% year-over-year, which suggests McCormick isn’t growing as quickly as it once did.
🚨 Valuation Premium – While McCormick has always traded at a premium, its current P/E ratio suggests that future upside may be limited.
🚨 Macroeconomic Headwinds – Inflation, supply chain issues, and shifting consumer trends could impact McCormick’s profitability.
Despite these challenges, McCormick’s strong brand and steady demand make it a more stable investment compared to many other stocks in the market.
Final Thoughts
McCormick continues to be a high-quality dividend stock with a long history of consistent payouts, strong cash flow, and a defensive business model. The company has been through many economic cycles and has always prioritized its dividend, making it an attractive option for income-focused investors.
The main question for investors is whether the stock’s current price is justified given its slower growth and high valuation. While McCormick isn’t a bargain, it remains a dependable dividend stock for those looking for stability in their portfolio. Keeping an eye on its debt levels and future earnings trends will be important, but for now, McCormick remains one of the more reliable names in the consumer staples sector.
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