In a previous article, I pointed out three stocks in the consumer-cyclical sector: Darden Restaurants, Inc. (NYSE:DRI), Hasbro, Inc. (NASDAQ:HAS) and Gannett Co., Inc. (NYSE:GCI). Those three stocks satisfy several important but simple investment characteristics for long-term income investors: 1.) uninterrupted dividends for the past 10 years; 2.) dividend yield is higher than 3%; 3.) EBITDA multiple is less than 10.
In this article, three more stocks with similar characteristics will be discussed. They are Sonoco Products Company (NYSE:SON), Regal Entertainment Group (NYSE:RGC) and Meredith Corporation (NYSE:MDP).
Packaging business
Sonoco Products Company (NYSE:SON) has a long history dating back to 1899. It operates in four main business segments: consumer packaging, paper and industrial converted products, display and packaging and protective solutions. Some 61.6% of the company’s total 2012 profits, or $176.8 million, was generated from the consumer-packaging segment. The paper and industrial converted products segment ranked second with $141.3 million in operating income.
What I like about Sonoco Products Company (NYSE:SON) is its consistent growth in both the top and bottom lines. Revenue increased from $2.8 billion in 2003 to $4.8 billion in 2012, while net income rose from $139 million to $196 million in the same period.
Sonoco Products Company (NYSE:SON) is a consistent dividend-paying company. Since 2003, its dividend has grown from $0.84 per share to $1.19 per share. It is trading at around $34.80 per share, with a total market cap of $3.6 billion. The market values the company at around 8 times EV/EBITDA. At the current trading price, Sonoco offers shareholders a decent dividend yield at 3.5%.
For full-year 2013, Sonoco Products Company (NYSE:SON) expects to generate EPS in the range of $2.26 to $2.32, with free cash flow of around $150 million, higher than the previous estimate of only $130 million.
Theater circuit operation
Regal Entertainment Group (NYSE:RGC) is in the business of theater-exhibition operations, with around 6,880 screens in 540 theaters. In 2012, around $1.9 billion, or 68% of total revenue, was generated from admissions, while the concessions segment brought in around $748.4 million in sales.
Regal Entertainment Group (NYSE:RGC) has consistently raised both ticket prices and concessions. In the past five years, the average ticket price increased from $7.68 to $8.90, while the average concessions per patron rose from $3.09 to $3.46. However, the increase in price seems to be offset by the decreasing attendance, which recently fell from 245.2 million to only 216.4 million.
Regal Entertainment has paid uninterrupted dividends for the past 10 years. Its dividend payment fluctuated in the range of $0.60 per share to $1.20 per share in the recent 10-year period.
In 2012, it paid out around $0.84 per share in dividends. The company is trading at $17.90 per share, with a total market cap of nearly $2.8 billion. The market values the company at 9.2 times EV/EBITDA.
Investors might like Regal Entertainment Group (NYSE:RGC) because of its high dividend yield at 4.7%. Nevertheless, investors should be worried about its large payout ratio of 239%. It means that Regal Entertainment pays investors dividends that are larger than what it has earned.
However, Regal Entertainment Group (NYSE:RGC) has managed to raise its free cash flow from $143 million in 2008 to $263 million. Looking forward, Regal Entertainment would use the capital allocation strategy to maintain the cash-dividend payout, after maintaining the net debt of three-to-four times EBITDA and $125 million in annual capital expenditures.
Magazines and TV stations
Meredith Corporation (NYSE:MDP) is considered one of the leaders in the media and marketing industry, operating in two main business segments: national media and local media. In the national media segment, Meredith Corporation (NYSE:MDP) has around 30 websites, 20 applications and 20 brands, while the local-media segment has around 12 network-affiliated television stations in the U.S., including MyNetworkTV, FOX and CBS.
Meredith Corporation (NYSE:MDP) recently generated most of its operating profits, or $133 million, from the national media segment, whereas local media contributed nearly $88.3 million in operating income.
In the past 10 years, Meredith has consistently paid dividends to its shareholders. The dividend increased from $0.37 per share in 2003 to $1.40 per share in 2012. The company is trading at around $40.60 per share, with the total market cap of $1.8 billion. The market values the company at around 8.3 times EV/EBITDA. At the current trading price, Meredith’s dividend yield is quite juicy at 4%.
Meredith Corporation (NYSE:MDP) has been generating consistent positive free cash flow. In 2012, the free cash flow came in at $146 million. For full-year 2013, the company expects to increase its annual dividends to $1.58 per share.
My Foolish take
All of those three mentioned-above companies are providing investors nice dividend yields. Investors should be careful with Regal Entertainment Group (NYSE:RGC) dividend, as its dividend payout is two times higher than its earnings, while the payout ratios of Sonoco and Meredith are only 61% and 59%, respectively.
Sonoco Products Company (NYSE:SON) and Meredith Corporation (NYSE:MDP), with consistent dividend-payment histories, reasonable payout ratios and single-digit EV multiples, could fit well in investors’ income-oriented portfolios.
Anh HOANG has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned.
The article 3 Consumer Cylical Companies With Juicy Dividend Yields originally appeared on Fool.com.
Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.
