Is Korn Ferry (KFY) the next Dividend Growth Monster?
US consulting firm has a five year CAGR of 29.9% and a big cash pile
Korn Ferry: 4 straight years of Double digit Dividend Hikes
The first focus stock published on dividendhike.substack.com is Korn Ferry (symbol KFY). The stock got our attention with a recent 12.1% dividend hike to a new record of $0.37 quarterly per share. This marks the 4th consecutive year with double digit dividend increases by Korn Ferry with a whopping 5 year CAGR of 29.9%.
ANNUAL DIVIDEND HIKES
2024: +12.1% to $0.37 quarterly
2023: +120.0% to $0.33 quarterly
2022: +25.0% to $0.15 quarterly
2021: +20.0% to $0.12 quarterly
2020: no increase
2019: no increase
2018: no increase
2017: no increase
2016: no increase
2015: first dividend ($0.10 quarterly)
Korn Ferry has a rock solid balance sheet and also does buybacks.
The company currently has a market cap of $3.5 billion and pays an estimated $77 million annually in dividends. The stock is up 13.6% year-to-date, but Korn Ferry trades below its all-time high set at the end of 2021 (see chart below).
Korn Ferry: A Closer Look
Korn Ferry (NYSE: KFY) is a global organizational consulting firm that helps businesses with talent acquisition, leadership development, organizational strategy, and compensation and benefits. Established in 1969, Korn Ferry has grown into a leader in the industry, providing a wide range of services to help organizations reach their full potential.
Business Overview
Korn Ferry operates in four primary segments:
Executive Search: Helping clients find and recruit top-level executives.
Hay Group: Offering organizational strategy, leadership development, and rewards services.
Futurestep: Providing recruitment process outsourcing and talent acquisition services.
Advisory: Delivering expertise on organizational design and effectiveness, talent strategy, and cultural transformation.
Financial Strengths
Dividend Growth: Korn Ferry has consistently increased its quarterly dividend, most recently hiking it by 12.1% to $0.37 per share. This marks the fourth consecutive year of double-digit dividend increases. Since 2015, the company has paid dividends and has averaged a 29.9% increase over the last five years.
Profitability: The company maintains a solid EBIT margin and Return on Equity (ROE) of approximately 13%.
Valuation: With an estimated Price-to-Earnings (P/E) ratio of 14 for the current FY 2025 (April) and a dividend yield of 2.2% at a stock price of $67.43, Korn Ferry presents a compelling valuation.
Balance sheet: Korn Ferry has a very strong balance sheet with a net cash position of $587 million at the end of FY 2024 (April), indicating strong financial health and a substantial cash reserve.
Book value: The book value for Korn Ferry was $33.34 per share as of April 30, 2024.
Peers and Market Position
Korn Ferry's primary competitors include Heidrick & Struggles, Spencer Stuart, Egon Zehnder, and Russell Reynolds Associates. While these firms also specialize in executive search and leadership consulting, Korn Ferry's diverse service offerings and consistent financial performance set it apart.
Join the Conversation
Is Korn Ferry a hidden gem in the organizational consulting space and a potential future Dividend Aristocrat? We invite you to share your views and experiences with Korn Ferry in the comments below. Your insights could provide valuable perspectives for our community of investors and professionals.
Feel free to comment and engage in discussions about Korn Ferry's market position, financial performance, and future prospects (also for the dividend!). We look forward to hearing from you!
Disclaimer: The information provided here is for informational purposes only and should not be considered financial advice. Investors should conduct their own research or consult with a financial advisor before making any investment decisions.
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