Bucking the Trend with Safe, Consistent Dividends: McGraw Hill (MHP)

It has been a grim couple of years for media companies in general. Slashed advertising budgets and intense competition from online publishers has forced a serious re-think of strategy for many of the industry players.

One company which has bucked this trend is the McGraw-Hill (MHP) group of companies which offers investors one of the better dividend yields in the sector at 3.05%.

The McGraw-Hill Companies (MHP) is a leading global information services provider in financial services, education and business information with leading brands such as Standard & Poor's, McGraw-Hill Education, Platts, Capital IQ, J.D. Power and Associates, McGraw-Hill Construction and Aviation Week. The company, founded in 1888, has offices in 40 countries.

Dividends and a focus on extracting value for shareholders has been a regular feature of this company. The dividend declared in January 2010, represented the 37^th consecutive year in which McGraw-Hill (MHP) has raised its dividend and since 1953 there have been 8 stock splits with the most recent being in 2005. The recently declared dividend means that dividends have grown at a rate of 9.9% since 1974.

The company’s financial strength and strong growth prospects worldwide have enabled it to extend its long record of annual dividend increases and to resume its share repurchase program. Since 1996, the company has returned approximately $9.4 billion to shareholders through dividend payments and share buybacks.

McGraw (MHP) is again looking at share repurchases in 2010.

When the company reported first quarter earnings in April 2010, it showed diluted earnings per share of $0.33 for the first quarter of 2010, a 65% increase compared to $0.20 for the same period in 2009. Net income for the period increased 63.9% to $103.3 million versus $63 million for the first quarter of 2009 while revenue grew by 3.7% in the first quarter to $1.2 billion.

Recovery in global bond markets, solid results in U.S. higher education, which is benefiting from double-digit growth in digital products and services, and an outstanding performance in global energy information markets were major factors in the first quarter.

With such a rich dividend history, exciting growth prospects and a conservatively managed business, McGraw-Hill (MHP) may provide an excellent opportunity for long-term dividend seeking investors.