General Mills, Pfizer raise quarterlies
By Shirley A. Lazo
12/21/98
Barron's
Page 38
-- The second-largest cereal maker after Kellogg, General Mills last Monday sweetened its quarterly common dividend to 55 cents a share from 53 cents, payable February 1 to holders of record January 8. The company snapped a 29-year skein of enhanced payouts in 1994, when it was working on "rightsizing" itself for sustainable, profitable growth. Payouts resumed their climb in 1996, as did earnings. General Mills has paid dividends without reduction since 1898.
Chairman and CEO Stephen W. Sanger said "this dividend increase reflects the continued growth momentum of our businesses and our strong financial postion. . . . The new rate is consistent with our stated plan to increase dividends over time, but at a pace slower than earnings growth until we achieve our targeted payout range of 50%-60% of earnings" (in fiscal '98, ended May 31, General Mills paid out 64% of profits).
Earlier this month, Big G shares set a 52-week high on the Big Board of 77 7/8, up about 9% from their closing 1997 trade. In the first half of fiscal 1999, General Mills repurchased 2.5 million of its shares at an average price of $66.
Major cereal brands include, among others, Cheerios, Wheaties and Total. Earnings per share in the second fiscal quarter rose 11%, and Sanger said Big G is "targeting continued double-digit growth in quarterly earnings per share as we work toward our previously stated goal of 12% EPS growth for the year."
-- Pharmaceutical companies generally can be counted on for healthy earnings and dividend growth. Bristol-Myers Squibb's 10% payout hike earlier this month, for example, marked 27 straight years of sweetened payouts (it also announced a 2-for-1 split). Last Monday Pfizer raised its quarterly common dividend 16%, to 22 cents a share from 19 cents, the 32nd boost in as many years. Disbursement will take place March 11 for investors of record February 12. Dividends have been paid without interruption since 1901. Pfizer shares are trading on the NYSE just a few points under their 52-week high of 121 3/4. They closed out '97 at 74 9/16, up 80% on the year. Wall Street estimates Pfizer will earn $1.98 or thereabouts this year and $2.48 in 1999, compared with 1997's $1.59.
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