Masco (MAS) Announces 5.3% Increase In Quarterly Dividend

Home building company, Masco Corporation (NYSE:MAS) declared a 5.3% increase in its quarterly dividend to 10 cents per common share on 23 Sep, 2016. This will be payable on Nov 14, 2016 to shareholders of record as of Oct 14, 2016. The revised payout translates to an annual dividend of 40 cents per share with a dividend yield of 1.16%.

The company’s board, during the second-quarter conference call, had expressed its intention of increasing the annual dividend by 2 cents to 40 cents per share.

We remind investors that Masco came up with an impressive performance in the second quarter, reporting a 21% increase in earnings per share. This was largely due to strong performance of its Plumbing segment.

The company has been successful in reducing debt by $400 million, as planned, and returning nearly $120 million to shareholders through dividends and share repurchases during the second quarter.

Notably, the company’s adjusted gross margin improved 220 basis points (bps) year over year during the last reported quarter. Masco’s various cost saving initiatives have been driving its margins lately. Moreover, it regularly divests its less profitable and underperforming businesses to focus on its core areas to accelerate growth and improve shareholder value.

Growth in the last few quarters can be attributed mainly to Masco’s repair/remodel activity. In the face of a steadily improving housing market, there is increasing demand for new home construction and repair, remodeling products. This improving momentum is expected to continue through the second half of 2016, which, in turn, will improve demand for Masco’s products further.

However, since 21% of Masco’s sales are generated outside the U.S., the company is subject to the impact of currency translation across the globe. Though the negative impact of currency translation has softened of late, the impact on sales is still significant. Again, consumers are increasing their spending only modestly as they are busy increasing their savings or are burdened with higher health care costs and still-tightened credit availability.

Masco currently carries a Zacks Rank #3 (Hold).

Stocks to Consider

Better-ranked stocks in the construction sector include Argan, Inc. (NYSE:AGX) , CRH plc (TO:CRH) and Gibraltar Industries, Inc. (NASDAQ:ROCK) . All three of them sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Full year fiscal 2017 earnings are expected to increase 51% for Argan.

CRH’s full year 2016 earnings are expected to grow 67.4%.

Gibraltar will likely register full year 2016 earnings growth rate of 32.4%.

Confidential from Zacks

Beyond this Analyst Blog, would you like to see Zacks' best recommendations that are not available to the public? Our Executive VP, Steve Reitmeister, knows when key trades are about to be triggered and which of our experts has the hottest hand. Click to see them now>>