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How Is Mead Johnson Rewarding Shareholders?

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Returns to shareholders

Mead Johnson Nutrition Company (MJN) returned $326 billion to shareholders through dividends and $1,437 billion through share repurchases in 2015. Mead Johnson has a dividend yield of 1.8% as of July 15, 2016. The company’s management has raised the dividend at a CAGR (compounded annual growth rate) of 12.9% over the past five years. For 2015, the company returned a total of $1.65 per share to shareholders in the form of dividends, which is an increase of 10% over 2014.

On June 9, the company announced that its Board of Directors had declared a regular quarterly dividend of $0.41 per share. This dividend was for the second quarter, which ended June 30, 2016. The increased dividend was paid on July 5, 2016, to shareholders of record on June 20, 2016.

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Share repurchase program

In the October earnings call, Mead Johnson’s board of directors announced a new share repurchase authorization of $1.5 billion of the company’s common stock through accelerated share repurchases. A significant portion of the proceeds from the $1.5 billion notes was used to finance the accelerated share repurchase program. Around $10.7 million of repurchases were done in the fourth quarter. The balance of shares will be delivered at the end of 2Q16.

Peers’ dividend yield

Mead Johnson’s peers in the industry include McCormick & Company (MKC) and General Mills (GIS). As of July 15, their dividend yields were as follows:

  • McCormick: 1.6%
  • General Mills: 2.6%

The iShares Morningstar Mid Core ETF (JKG) invests 0.75% of its holdings in MKC, and the PowerShares DWA Consumer Staples Momentum Portfolio (PSL) invests 3.6% of its holdings in MKC.

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