TMO Creates Shareholder Value through Strong Capital Allocation


Nov. 30 2016, Updated 11:02 a.m. ET

Quarterly cash dividend

Thermo Fisher Scientific (TMO) announced a quarterly cash dividend of $0.15 per share on November 10, 2016. The dividend is payable on January 16, 2017, to shareholders of record on December 15, 2016. It’s equivalent to the quarterly dividend of $0.15 per share paid by the company in the previous fiscal year.

Thermo Fisher Scientific has been paying an annualized dividend of $0.60 per share for the last four years. The company started paying dividends in 2012. The last quarterly dividend increase was paid on January 15, 2013, increasing the dividend amount from $0.13 per share to $0.15 per share for the quarter.

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Thermo Fisher Scientific’s capital allocation strategy

Thermo Fisher Scientific aims to strengthen its competitive position and deliver shareholder value through an efficient capital allocation strategy. Mergers and acquisitions (or M&A) have been Thermo Fisher Scientific’s priority capital allocation area over the recent years. In 3Q16, the company completed the acquisition of FEI Company for $4.2 billion. For details of the acquisition, read Thermo Fisher Scientific Completed the FEI Acquisition.

Since 2010, the company has deployed around $32 billion of capital with around 81% of the capital invested in M&As. The rest of the capital is deployed towards share repurchases and dividends that constitute other modes of returning shareholder value. The company started paying dividends in 2012.

In 2016, Thermo Fisher Scientific deployed approximately $5 billion on M&As and $1 billion in share repurchases. In the full year 2016, the company is on track to deploy approximately $240 million towards dividends.

Thermo Fisher Scientific has reached a dividend payout ratio of ~12.1%. Its dividend yield is ~0.43%. Peers Medtronic (MDT), Baxter (BAX), and Abbott Laboratories (ABT) have dividend yields of around 2.3%, 1.2%, and 2.7%, respectively.

If you’re interested in getting diversified exposure to Thermo Fisher Scientific, you can invest in the iShares Russell 1000 Growth ETF (IWF), which holds ~0.24% in TMO.


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