Friday, January 4, 2013

Stock Analysis: Stryker Corporation

Stryker Corporation (SYK), together with its subsidiaries, operates as a medical technology company. The company operates in three segments: Reconstructive, MedSurg, and Neurotechnology and Spine. The company is a member of the dividend achievers index, and has been able to boost distributions for 20 years in a row.

Stryker's last dividend increase was in December 2012 when the Board of Directors approved a 24.70% increase to 26.50 cents/share. The company’s peer group includes Johnson & Johnson (JNJ), Zimmer Holdings (ZMH) and Smith & Nephew (SNN).



 Over the past decade this dividend growth stock has delivered an annualized total return of 6% to its shareholders.

The company has managed to deliver an 11% average increase in annual EPS since 2002. Analysts expect Intel to earn $4.04 per share in 2012 and $4.30 per share in 2013. In comparison, the company earned $3.45/share in 2011.
The return on equity has decreased from 27% in 2002 to 18% by 2012. I generally want to see at least a stable return on equity over time.
The annual dividend payment has increased by 33.50% per year over the past decade, which is higher than the growth in EPS.
A 33% growth in distributions translates into the dividend payment doubling every two years on average. If we look at historical data, going as far back as 1993, one would notice that the company has actually managed to double distributions every three years on average. The dividend payout ratio has increased from 6% in 2002 to 21% in 2011. A lower payout is always a plus, since it leaves room for consistent dividend growth minimizing the impact of short-term fluctuations in earnings.
Currently Stryker is attractively valued at 14.70 times earnings and has a sustainable distribution. However, given the low yield of 2%, I would consider initiating a position in the stock on dips below $43.

 Full Disclosure: Long JNJ

 Relevant Articles:

 - Seven Dividend Hikers in the News
My Entry Criteria for Dividend Stocks
How to invest like a Dividend Billionaire
Are dividend stocks in a bubble?

 This article was written by Dividend Growth Investor. If you enjoyed this article, please subscribe to my feed [RSS], or have future articles emailed to you [Email] or follow me on Twitter [Twitter].

0 comments:

Post a Comment

Recent Posts From DIV-Net Members