Smart Dividend Portfolio Edition #85: Seasoned Strength

Shrilekha Pethe on November 3, 2025

Dear Investor,

Welcome to the 85^thedition of TipRanks’ Smart Dividend Portfolio & Newsletter.

Market-Moving News: Nov 03, 2025

Last week, stocks extended their winning streak, with the Nasdaq 100 (NDX) hitting another record high on Friday. The S&P 500 (SPX) gained 0.26%, the Dow Jones Industrial Average (DJIA) rose 0.09%, and the Russell 2000 (IWM) added 0.54%. Seven of eleven sectors finished higher, led by Consumer Discretionary stocks, while Utilities lagged.

The main story of the week came from Washington and Beijing, as U.S. President Donald Trump met Chinese President Xi Jinping. The two reached a temporary trade truce focused on rare earth exports. China agreed to delay new export controls for one year, while the U.S. paused plans to expand its export blacklist.

The deal was presented as a win for both sides, but details remain scarce. U.S. officials said the agreement may ease near-term pressure on supply chains for critical minerals used in semiconductors, fighter jets, and electric cars. Still, analysts cautioned that existing Chinese controls are unchanged, meaning producers remain dependent on Beijing for key materials.

The White House called the pause “a win for global stability,” though some critics said the compromise favors China more than the U.S. The Supreme Court is expected to hear a case this month that could further test the legality of Trump’s trade tariffs under emergency powers.

Meanwhile, Federal Reserve policymakers continued to signal caution on further rate cuts. Dallas Fed President Lorie Logan said the October cut was “unnecessary” and that another move in December would require faster progress on inflation. The 10-year yield’s drop reflected stable demand for bonds despite mixed Fed comments.

This Week’s Quality Dividend Stock Idea

McCormick & Co. (MKC), headquartered in Hunt Valley, Maryland, is a global leader in flavor, manufacturing, marketing, and distributing spices, seasoning mixes, condiments, and other flavorful products. It serves retail customers through iconic brands like French’s, Frank’s RedHot, Lawry’s, and Cholula, while providing customized flavor solutions to food manufacturers and restaurants worldwide. MKC operates in over 150 countries and is recognized for its innovation, supply chain efficiency, and leadership in the global flavor industry.

Spice Journey

McCormick’s story began in 1889 when Willoughby M. McCormick founded the company in Baltimore, Maryland, selling root beer extract, fruit syrups, and flavoring products door to door. From these modest beginnings, the business evolved into a leading producer of spices and seasonings. After a devastating fire in 1904 destroyed its facilities, McCormick swiftly rebuilt and expanded, emphasizing its trusted brand of quality.

Throughout the 20th century, the company grew steadily through organic expansion and strategic acquisitions. A defining milestone came in 1947 with the purchase of Schilling & Company, which broadened McCormick’s U.S. footprint and cemented its leadership in the domestic spice market. Over the following decades, McCormick diversified its operations and built a global supply network, extending its reach across Europe, Asia, and Latin America. By the 1980s, it had established itself as a major provider of spices and seasonings, known for product innovation and supply chain efficiency serving both retail and industrial markets.

The 21st century marked McCormick’s evolution into a diversified global flavor powerhouse. The 2008 acquisition of Lawry’s and the 2011 purchase of Poland-based Kamis strengthened its seasoning portfolio and expanded its presence in key international markets. To satisfy regulatory requirements related to the Lawry’s acquisition, McCormick divested its Season-All seasoned salt business to Morton Salt Group. This growth continued with the 2013 acquisition of Wuhan Asia Pacific Condiments in China, which deepened its exposure to fast-growing Asian markets.

McCormick’s most transformative deal came in 2017 with the $4 billion acquisition of Reckitt Benckiser’s Food Division, adding iconic brands such as French’s mustard and Frank’s RedHot hot sauce. The transaction broadened McCormick’s flavor portfolio, expanded its footprint in major markets like the U.S., U.K., and Canada, and boosted earnings through higher-margin branded products. The company further enhanced its clean and natural flavor offerings in 2020 with the acquisition of FONA International. It strengthened its position in the fast-growing condiment category with the purchase of the Cholula hot sauce brand that same year.

In 2025, McCormick expanded its supply chain capabilities by acquiring Jurado, a U.S.-based chili mash supplier, and announced plans to raise its ownership in McCormick de Mexico to a controlling 75%, reinforcing its commitment to growth in Latin America.

Seasoned Edge

McCormick operates a diversified global flavor business designed to deliver consistent earnings and cash flow across varying economic conditions. The company generates revenue by manufacturing, marketing, and distributing spices, seasoning mixes, condiments, and flavoring products that serve both retail and commercial customers worldwide. Its balanced business structure—spanning consumer-facing brands and industrial flavor solutions supports recurring demand, steady volume growth, and strong pricing power backed by brand loyalty and global scale.

The company operates through two segments: Consumer and Flavor Solutions. The Consumer segment, which accounts for about 56% of total revenue, markets iconic brands such as McCormick, French’s, Frank’s RedHot, Lawry’s, and Cholula through grocery, mass merchandise, warehouse club, and e-commerce channels. It also includes regional brands like Schwartz, Kamis, and Club House. Approximately two-thirds of Consumer sales come from spices, seasonings, and condiments, reflecting the strength of McCormick’s core categories.

The Flavor Solutions segment contributes around 44% of total revenue and provides customized flavor systems, sauces, and seasonings to food manufacturers and restaurant chains globally. Long-term supply contracts, deep technical expertise, and integration into customers’ product development processes position McCormick as a trusted innovation partner. As demand shifts toward cleaner, more natural, and globally inspired flavors, McCormick’s R&D and sensory science capabilities help capture growth opportunities in this high-margin business.

A cornerstone of McCormick’s operating model is its Comprehensive Continuous Improvement (CCI) program – a companywide initiative focused on improving productivity, reducing costs, and reinvesting savings into growth initiatives. CCI enhances efficiency across manufacturing, supply chain, procurement, and administrative functions through automation, lean manufacturing, and strategic sourcing. Savings generated are channeled into brand marketing, innovation, and capacity expansion, helping offset inflation and tariff pressures. Management considers CCI critical to sustaining margin expansion, free cash flow generation, and operational resilience. Alongside CCI, McCormick increasingly leverages analytics and digital marketing to enhance customer engagement and optimize pricing and promotions.

Savory Strength

McCormick raised its estimated gross tariff impact for 2025 to $70 million, up from the prior forecast of $50 million, with annualized exposure now projected at roughly $140 million versus $90 million previously. Excluding tariffs, commodity cost inflation has been revised upward to low-to-mid single-digit levels, primarily due to temporary third-quarter cost acceleration and supplier pass-throughs tied to global trade dynamics. Despite the increase, management expects most of the impact to be offset through the CCI program and disciplined pricing strategy.

Despite cost headwinds, the Consumer segment continues to perform well, gaining market share across spices, seasonings, mustard, and hot sauce. U.S. branded unit consumption has outpaced the overall edible category, while distribution gains in e-commerce and club channels have strengthened momentum.

In Flavor Solutions, strong growth in quick-service restaurants (QSRs) across the Americas and Asia Pacific helped offset softer demand among large consumer packaged goods (CPG) and branded foodservice customers. The technically insulated flavors category continued to outperform, supported by demand from innovators and private labels in protein snacks, functional beverages, and zero-sugar products. Reformulation activity also accelerated as food manufacturers moved toward natural colors, reduced salt and sugar, and cleaner labels, driving increased collaboration with McCormick on flavor optimization.

Leadership reaffirmed the company’s long-term growth strategy centered on brand strength, category expansion, and innovation through proprietary flavor technologies, such as advanced flavor-capture systems and sensory science research. For the fourth quarter, management expects volume growth across all Consumer regions, supported by holiday merchandising, innovation carryover, and expanded distribution, with gross margin projected to improve sequentially as cost mitigation efforts scale.

In the Asia Pacific region, performance has remained steady despite uneven market conditions. China is showing a gradual recovery, with improving retail demand as consumer confidence returns, though foodservice sales remain pressured by austerity measures. China remains one of McCormick’s most important growth markets due to its large and expanding middle class, rising demand for convenient and flavorful home cooking, and growing partnerships with local and multinational food manufacturers. Across the region, sales are up 2% year to date, supported by stronger consumption trends in key markets and growth in QSR partnerships and local flavor categories. Management expects modest acceleration in regional growth in the fourth quarter, aided by easier year-over-year comparisons and continued momentum in China’s retail channel.

From a financial perspective, McCormick anticipates stronger cash flow in the second half of 2025. Inventory buildup from earlier in the year is expected to unwind, releasing working capital back into operations. Historically, the fourth quarter has been McCormick’s most cash-generative period, driven by seasonal consumer demand tied to holiday cooking and higher volumes across both segments. Management remains confident that cash generation will accelerate into year-end, supporting operational flexibility and funding capacity for future growth initiatives.

Flavor Momentum

McCormick has maintained a consistent growth trajectory in recent years, supported by its portfolio of strong brands, disciplined cost management, and a well-balanced business mix. Over the past three years, the company’s revenue and earnings per share have grown at a CAGR of 2.1% and 4%, respectively. This steady progress reflects solid volume expansion in its Consumer segment, strategic pricing initiatives, product innovation, international market growth, and ongoing efforts to enhance supply chain efficiency and margins.

In the third quarter of fiscal 2025, McCormick reported net sales of $1.72 billion, up roughly 3% year-over-year and slightly ahead of expectations. Operating income rose 1.8% to about $294 million, while adjusted EPS increased 2.4% to $0.85, exceeding analyst forecasts. The company’s gross margin declined 120 basis points to 37.5%, pressured by higher commodity costs and tariffs, though underlying demand remained resilient. In the Consumer segment, organic sales advanced 3%, led by strong performance in the Americas and EMEA, partially offset by a 1% decline in the Asia-Pacific region due to softness in China’s foodservice market. Meanwhile, Flavor Solutions delivered 1% organic growth, driven by stable demand and modest pricing gains.

Year to date, McCormick generated $420 million in operating cash flow, compared with $463 million in the prior year, as higher inventories and receivables tied to sales growth temporarily weighed on cash generation. The company ended the quarter with $95 million in cash and $4.4 billion in total debt, with a net debt-to-EBITDA ratio of around 3.3x. An interest coverage ratio of 5.36x reflects solid debt-servicing capacity, while capital expenditures of $138 million were primarily directed toward capacity expansion and automation projects to support long-term growth.

Looking ahead, McCormick expects modest but steady progress for fiscal 2025. Net sales are projected to rise between 0% and 2%, or 1% to 3% on an organic basis, supported by favorable volume and product mix. The company anticipates a stable gross profit margin year-over-year, as cost pressures from commodities and global trade uncertainty persist. Operating income is forecast to grow 1% to 3%, driven by continued productivity gains from its CCI program and SG&A streamlining, partially offset by higher investments in marketing and digital capabilities. Adjusted diluted EPS is expected to reach approximately $3.03 at the midpoint, representing a 2%–4% increase, or 4%–6% growth on a constant-currency basis.

Dividend Spice

McCormick has paid uninterrupted dividends for more than 95 years and has increased them for 38 consecutive years, earning its place among the elite group of Dividend Kings. Over the past decade, McCormick’s dividend has grown at an average annual rate of roughly 8.6%, reflecting steady earnings growth and robust free cash flow. In the most recent quarter, the company declared a quarterly dividend of $0.45 per share, or $1.80 annually, yielding about 2.8%, higher than the defensive consumer sector average of 2.5%. With a payout ratio near 61% of adjusted earnings, McCormick maintains a disciplined balance between returning capital to shareholders and funding reinvestment in growth or debt reduction.

In addition to dividends, McCormick continues to return value through share repurchases. During the first nine months of fiscal 2025, the company repurchased approximately $29 million worth of stock, leaving $419 million available under its $600 million authorization. These buybacks help offset equity dilution and modestly enhance earnings per share growth.

Although McCormick’s stock has declined roughly 16% over the past year due to inflationary pressures and margin headwinds, its underlying fundamentals remain strong, reflecting a stable business model and continued earnings resilience.

From a valuation standpoint, McCormick trades at more than a 20% discount to the historical averages based on non-GAAP trailing and forward P/E ratios and forward EV/EBITDA, and at more than a 15% discount to forward price-to-cash flows. However, relative to peers like Kraft-Heinz and Conagra Brands, MKC commands a modest premium based on trailing and forward P/E ratios and forward EV/EBITDA. underscoring investor confidence in its strong brand portfolio and steady financial performance. This premium reflects the company’s consistent pricing power, reliable cash generation, and proven ability to deliver growth across economic cycles.

Analysts remain broadly positive on McCormick’s outlook, citing its long track record of organic growth, disciplined execution, and strategic acquisitions. Consensus estimates point to approximately 19% upside from current levels, with some projections suggesting potential gains of up to 42%. A discounted cash flow (DCF) analysis further supports the view that McCormick’s stock is undervalued, trading roughly 46% below its intrinsic value, implying meaningful long-term upside for investors.

Investing Takeaway

McCormick stands out as a reliable income investment, supported by an exceptional track record of uninterrupted dividend payments and decades of consistent increases. Its disciplined capital allocation and resilient earnings allow the company to maintain a balanced approach between rewarding shareholders and funding growth initiatives. Beyond dividends, ongoing share repurchases further enhance shareholder returns and modestly boost per-share earnings. Even amid short-term margin pressures and broader market volatility, McCormick’s stable business model, strong brand portfolio, and global reach underpin confidence in the sustainability of its dividend, making it a compelling choice for investors seeking steady, long-term income.

Dividend Investor Portfolio

Portfolio News

▣ Automatic Data Processing (ADP) reported its fiscal Q1 FY26 results on October 29, posting solid performance despite a challenging macro environment. The company’s revenue rose about 7% year over year to approximately $5.2 billion, slightly ahead of market expectations, while organic constant-currency growth stood at 6%. Adjusted earnings per share increased 7% from the prior year to $2.49, modestly exceeding consensus forecasts. ADP’s adjusted EBIT margin held steady at 25.5%, underscoring disciplined cost management. In its core Employer Services segment, client retention remained strong at 92.1%, while the PEO segment posted 7% revenue growth, though its margin narrowed by 140 basis points due to higher pass-through benefit costs. Looking forward, ADP projects 5–6% revenue growth and 8–10% adjusted EPS growth for fiscal 2026, signaling steady execution amid a cautious economic outlook.

▣ Amgen (AMGN) is set to announce its quarterly results for the period ended September on November 4. Analysts project adjusted earnings of about $5.02 per share and revenue near $8.9 billion for the quarter. For fiscal 2025, the biotechnology giant has guided for adjusted EPS of roughly $20.75 and revenue around $36 billion, both at the midpoint of its outlook. Investors are focused on whether Amgen can extend its streak of outperforming estimates, as it continues to face patent expirations and pricing pressures across key drug portfolios. The upcoming report is expected to shed light on how the company is balancing short-term challenges with its longer-term growth drivers, including new product launches and its expanding biosimilars and oncology pipelines.

▣ EOG Resources (EOG) is set to report its third-quarter results on November 7, with analysts projecting earnings of about $2.46 per share, a year-over-year decline, and revenues likely to be flat at nearly $6 billion. The figures are likely to reflect the impact of softer commodity prices compared to last year’s elevated levels. As one of the largest independent U.S. oil and gas producers, EOG’s quarterly update will be closely watched for signs of cost discipline, production trends, and capital efficiency. With global energy supplies rising and oil prices under pressure, investors are focused on the company’s ability to sustain robust cash flow generation and maintain a strong balance sheet.

▣ ExxonMobil (XOM) reported its third-quarter 2025 results on October 31, posting adjusted earnings of $8.06 billion, or $1.88 per share, slightly above the prior quarter and ahead of analyst expectations. Revenue declined 5% year-over-year to $85.3 billion, falling short of estimates, as weaker crude prices and lower refining margins weighed on results. The energy major generated $14.8 billion in operating cash flow and $6.3 billion in free cash flow during the quarter, supported by strong upstream operations. Total production reached a record 4.8 million barrels of oil-equivalent per day, driven by robust output from the Permian Basin and Guyana. Despite macro headwinds, ExxonMobil returned $9.4 billion to shareholders – comprising $4.2 billion in dividends and $5.1 billion in buybacks – and announced a 4% dividend hike to $1.03 per share, reinforcing its commitment to consistent shareholder returns.

▣ Lockheed Martin (LMT) and Google Public Sector have announced a strategic collaboration to integrate Google’s generative AI technologies, including its Gemini models, into the Lockheed Martin AI Factory. The partnership aims to bring Google’s cutting-edge AI tools into Lockheed Martin’s secure, on-premises, and air-gapped environments, ensuring compliance with strict national security and mission assurance standards. By embedding these AI capabilities across its enterprise, Lockheed Martin seeks to enhance data-driven decision-making, streamline operational efficiency, and accelerate the development of defense and aerospace solutions.

▣ Qualcomm (QCOM) is poised to release its quarterly results on November 5, with analysts broadly expecting an adjusted earnings figure near $2.87 per share and revenue around $10.75 billion. Investors will closely monitor how the company balances headwinds in its smartphone and handset markets with growth opportunities in automotive, IoT, and data center segments. At the same time, regulatory and macro-pressures – especially from licensing revenue and competition – remain in focus.

▣ VICI Properties (VICI) announced its third-quarter 2025 results on October 30, showing steady progress in its gaming and entertainment real estate business. Total revenue rose 4.4% year-over-year to around $1.0 billion, and came in above estimates. Net income attributable to common stockholders increased by 4% year-over-year to $762 million, or $0.71 per share. Meanwhile, adjusted funds from operations (AFFO) increased 7.4% to $637.6 million, or $0.60 per share, marking 5.3% growth on a per-share basis. The company also declared a quarterly cash dividend of $0.45 per share, up about 4% from a year ago, representing its eighth consecutive annual dividend increase.

▣ VZ (VZ) reported its third-quarter 2025 results on October 29, delivering adjusted earnings of $1.21 per share, slightly above analyst expectations of $1.19. Total operating revenue rose 1.5% year-over-year to $33.8 billion, though it fell short of the estimated $34.3 billion. The telecom giant added 44,000 monthly bill-paying wireless subscribers, more than double market expectations, driven by strong promotional activity around the latest iPhone launch. Wireless service revenue increased 2.1% to $21 billion, while broadband net additions reached 306,000, including 61,000 new Fios Internet customers—its strongest result in two years. Under incoming CEO Dan Schulman, Verizon reaffirmed its full-year outlook, projecting total wireless service revenue growth of 2%–2.8%, adjusted EPS growth of 1%–3%, and free cash flow of around $20 billion at the midpoint, signaling confidence in its operational and financial momentum.

Recent Trades

None at the moment, although we are considering adding a stock to our portfolio when the market conditions allow for an attractive entry point. Stay tuned.

Portfolio Attributes

Dividend Portfolio Yield	Expected Dividend Growth	Expected Annual Income
3.94%	+5.95%	$5,904.22
Yield-on-Cost Adjusted, Weighted	Average Analyst 12-Month Growth Outlook	10K Per Stock at the Time of Purchase

Current Portfolio

Name	EX-Dividend Date	Payment Date	Yield on Cost	Annual DPS
Automatic Data Processing (ADP)	Dec 11, 2025	Jan 01, 2026	2.46%	$6.16
Amgen (AMGN)	Nov 21, 2025	Dec 12, 2025	3.27%	$9.52
BlackRock (BLK)	Dec 04, 2025	Dec 23, 2025	2.61%	$20.84
Bank of Nova Scotia (BNS)	Jan 07, 2026	Jan 29, 2026	5.98%	$3.21
EOG Resources (EOG)	Jan 15, 2026	Jan 29, 2026	3.06%	$4.08
ExxonMobil (XOM)	Nov 17, 2025	Dec 10, 2025	3.64%	$4.12
IBM (IBM)	Nov 12, 2025	Dec 10, 2025	3.14%	$6.72
JPMorgan Chase (JPM)	Jan 06, 2026	Jan 29, 2026	3.43%	$6.00
Kroger (KR)	Nov 17, 2025	Dec 01, 2025	3.08%	$1.40
Lockheed Martin (LMT)	Dec 02, 2025	Dec 29, 2025	2.85%	$13.80
PepsiCo (PEP)	Dec 09, 2025	Jan 06, 2026	3.8%	$5.69
Philip Morris (PM)	Dec 26, 2025	Jan 13, 2026	6.06%	$5.88
Qualcomm (QCOM)	Dec 08, 2025	Dec 22, 2025	2.36%	$3.56
VICI Properties (VICI)	Dec 17, 2025	Jan 09, 2026	5.22%	$1.8
Verizon (VZ)	Jan 12, 2026	Feb 03, 2026	6.09%	$2.76

NameEX-Dividend DatePayment DateYield on Cost Annual DPS

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Click here for more stock market analysis from TipRanks Macro & Markets research analyst Yulia Vaiman

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Category: Dividend