Understanding McCormick’s Upcoming Dividend Run: What Investors Should Know
This morning, a “Potential Dividend Run Alert” was issued for McCormick & Co Inc (NYSE: MKC) through our DividendChannel.com Dividend Alerts service, a free email alert feature. Let’s dive deeper into what this means.
What Is a Dividend Run?
A “Dividend Run” is an investment concept that many discover at finance conferences. To grasp this idea, it is important to start with the ex-dividend date of a stock.
The ex-dividend date is when a buyer will not receive the declared dividend if they purchase shares on or after that day. To qualify for the dividend, investors need to buy shares before this date. Typically, one can expect a stock’s price to drop by the dividend amount on the ex-dividend date, assuming all other factors remain constant. For example, if a stock pays a dividend of $0.45, buyers must purchase it prior to this date to receive it. If the stock doesn’t drop in value by that same dividend amount, new buyers are essentially paying more for the same shares.
Now, considering this expected drop, it makes sense that a stock’s price should rise as the ex-dividend date approaches. Otherwise, if prices only dropped, those shares could theoretically reach zero after enough dividend payments—an illogical outcome for a profitable company. Therefore, there should be upward pressure on the stock’s price leading up to the upcoming dividend, resulting in what some refer to as a potential Dividend Run.
Different Strategies for Dividend Runs
Investors have various opinions on the optimal timing for capturing these Dividend Run effects. Some may choose specific buy and sell dates, while others might employ dollar-cost averaging strategies. A common approach is to buy shares shortly before the ex-dividend date, hold them for the dividend, and then sell after receiving it. Alternatively, some investors sell the day before the ex-dividend date to capture capital gains, with many discussing a timeframe of about two weeks before selling.
Analyzing McCormick’s Recent Dividend History
For instance, let’s review the $0.42 dividend that became ex-dividend on 07/08/24. On the last trading day prior, MKC shares were priced at $70.88. Looking back ten trading days to 06/20/24, shares closed at $68.56. This indicates a capital gain of $2.32 leading up to that dividend.
From the last four dividends paid out by MKC, using a Dividend Run strategy would have yielded capital gains exceeding the dividends received three out of four times, totaling $8.15 in capital gains, which is greater than the cumulative dividend payout of $1.68. The table below outlines these recent dividend performances:
| Ex-Dividend | ——Price 2 Weeks Prior—» | ——Price 1 Day Prior—» | Run Gain/Loss | |||
|---|---|---|---|---|---|---|
| 10/07/24 | 0.42 | 09/20/24 | 82.99 | 10/04/24 | 80.61 | -2.38 |
| 07/08/24 | 0.42 | 06/20/24 | 68.56 | 07/05/24 | 70.88 | +2.32 |
| 04/05/24 | 0.42 | 03/20/24 | 68.73 | 04/04/24 | 76.41 | +7.68 |
| 12/28/23 | 0.42 | 12/12/23 | 67.68 | 12/27/23 | 68.21 | +0.53 |
| Div Total: | 1.68 | “Divvy Run” Total: | +8.15 | |||
Looking Ahead
In about two weeks, McCormick & Co Inc (NYSE: MKC) will go ex-dividend for its upcoming dividend of $0.45 per share. Will historical trends hold up?
Upcoming Dividend: 0.45/share
Ex-Div Date: 12/30/24
Payment Date: 01/13/25
Dividend Frequency: Quarterly
Full MKC Dividend History »
As the saying goes, past performance doesn’t guarantee future results. Nevertheless, for investors who consider Dividend Runs a valuable strategy, MKC stands out with an implied annual yield of 2.23%.
Stay tuned for future Dividend Run candidates, and if interested, you can sign up for our free Dividend Alerts feature directly through DividendChannel.com.
Also see:
• Stocks Being Bought By Hedge Funds
• SDH Market Cap History
• PEV Next Earnings Date
The views and opinions expressed herein are those of the author and do not necessarily reflect those of Nasdaq, Inc.
