Masco Corporation Ups Dividend by 20% - Analyst Blog

Homebuilding company Masco Corporation MAS, in an attempt to boost shareholders returns, recently hiked its quarterly dividend by 20%. This marks the company's 14^th quarterly dividend hike.

The quarterly dividend was increased from 7.5 cents to 9.0 cents per common share, equivalent to an annual dividend of 36 cents per share for fiscal 2014, up from 30 cents per share for fiscal 2013. The new dividend will yield 1.78% annually.

Masco consistently returns value to its shareholders and in fiscal 2013 it repurchased 1.7 million shares for a total of $35 million.

The increased dividend reflects the company's sound financial position. Apart from enhancing shareholders return, dividend increase improves the market value of the stock.

The dividend hike comes on the heels of lower-than-expected earnings in first-quarter fiscal 2014. Earnings per share of 15 cents were ahead of the year-ago results by 15.4%. However, results missed the Zacks Consensus Estimate by 16.7% due to lower sales as harsh winter hurt construction activity in North America.

Net sales of the Zacks Rank #4 (Sell) company also missed the Zacks Consensus Estimate by 1.5% as housing slowdown since the second half of 2013 lowered the demand for Masco's products. The top line was also affected by harsh weather conditions.

However, Masco is focusing on product innovation and cost improvements to improve its margins. The company is also divesting its less profitable and underperforming assets to focus more on the core areas.

Other Stocks to Consider

Other better-ranked stocks in the building/construction sector include United Rentals, Inc. URI, TRI Pointe Homes, Inc. TPH and The New Home Company LLC NWHM. All the stocks carry a Zacks Rank #2 (Buy).