Analysis – Reynolds American Inc. Increases Dividend by 10%

RAI

Reynolds American Incorporated  announced a regular quarterly dividend of $0.46, a 10 percent increase from the prior rate of $0.42 per share. The dividend will be paid at the new higher rate on October 3, 2016, to shareholders of record at close of business on September 12, 2016.

Date Quarterly Dividend
9/12/2016 0.46
6/8/2016 0.42
3/8/2016 0.42
12/10/2015 0.36
9/8/2015 0.36
6/8/2015 0.335
3/6/2015 0.335
12/11/2014 0.335
9/8/2014 0.335
6/6/2014 0.335
3/6/2014 0.335
12/12/2013 0.315
9/6/2013 0.315
6/6/2013 0.315
3/6/2013 0.295
12/6/2012 0.295
9/6/2012 0.295
6/7/2012 0.295
3/7/2012 0.28
12/7/2011 0.28
9/8/2011 0.265
6/8/2011 0.265
3/8/2011 0.265
12/8/2010 0.245
9/8/2010 0.225
6/8/2010 0.225
3/8/2010 0.22

Analysis of Valuation of Reynolds American Inc. (Symbol RAI).

Reynolds is trading at the top of its average price/sales (P/S) range.  Reynolds is trading below its average historical dividend yield.

Price 7/27/16 % Yield 5 Year Div. Growth Rate  SPS    2016 P/S Ratio 10 yr P/S Low 10 yr P/S  High 5 yr max Yield % 5 yr lowest Yield %
$49.90 3.36% 10% 8.9 5.61 0.45 5.61 6.10% 2.75%

Reynolds American Inc. Dividend Yield Chart (Click to enlarge)

RAI2

Explanation:  Dividend growth stocks may be valued upon historical relative price/sales and current yield analysis. Dividend stocks trading at a low historical price/sales (P/S) ratio should be viewed more highly to investors due to their depressed valuation versus other higher P/S ratio stocks.  Max P/S price target is based upon company reaching its highest historical P/S ratio.  Dividend stocks should also be viewed favorably when the current yield is above historical readings for the past 10 years. Further information on dividend investing and evaluating dividend growth candidates can be found at http://seekingalpha.com/author/timothy-mcintosh/articles

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