Dividend Growth Stock Overview: H. B. Fuller, Inc.

H. B. Fuller is a manufacturer and marketer of specialty chemicals used in
a variety of applications including food packaging like this cereal box.
Photo from the H. B. Fuller website.

About H. B. Fuller Company

H. B. Fuller Company develops, manufactures and sells specialty chemicals, in particular industrial adhesives and sealants. Fuller’s products are used in many markets including packaging (food and beverage containers), consumer (disposable diapers and footwear), and durable assembly products (water filtration), along with the residential construction market (flooring, doors and windows). The company sells its products in 40 countries and generates roughly 55% of its revenue outside the United States.

Fuller breaks out its operations into four segments. Three of the segments produce and supply industrial adhesives and are broken out by geography: Americas Adhesive, EIMEA (Europe, India, Middle East, Africa) and Asia-Pacific. The fourth segment, Construction Products, markets floor preparation products, including grouts and mortars for tile setting, and sealants and related products for heating, ventilation and air conditioning installations.

The Americas Adhesive segment generates about 45% of Fuller’s total revenue. The EIMEA and Asia-Pacific segments generate roughly 33% and 12% of the company’s revenue respectively, while the Construction Products segment’s revenue is generally about 10% of the company’s total revenue.

The company is a member of the S&P Small Cap 600  index and S&P’s High Yield Dividend Aristocrats index, and trades under the ticker symbol FUL.

H. B. Fuller’s Dividend and Stock Split History

H. B. Fuller Dividend Growth

H. B. Fuller has grown its dividend an average of about 6% over two decades, but averaged 13.3% dividend growth from 2011 – 2016.

H. B. Fuller came public in on April 25, 1968 and has increased dividends since then. The company announces its annual dividend increases in mid-April and the stock goes ex-dividend roughly two weeks later. In April 2017, H. B. Fuller announced a 1-cent per share increase in the quarterly dividend, corresponding to an 7.7% increase. The annualized rate is now 56 cents per share. I expect the company to announce its 48th annual increase in April 2017.

After an extended period of small to moderate increases since 1999, Fuller picked up the pace of its dividend increases since 2012. The company’s 5-year compounded annual dividend growth rate is 13.27%. The company has a much more modest long-term dividend growth rate, with 20-year and 25-year compounded growth rates of 6.24% and 6.95%.

Since coming public in 1968, H. B. Fuller has split its stock roughly every 5 – 9 years. The first two stock splits were 3-for-2 and occurred in November 1968 and February 1971. The next two were 2-for-1 splits, occurring in May 1977 and June 1984. Following a 3-for-2 split in May 1992, Fuller split its stock 2-for-1 in October 2001 and, most recently, 2-for-1 in July 2006. Each share of H. B. Fuller stock owned in 1968 has split into 54 shares today.

Over the 5 years ending on December 31, 2015, H. B. Fuller stock appreciated at an annualized rate of 13.3%, from $19.42 to $36.23. This outperformed the 10.2% annualized return of the S&P 500 and was nearly equal to the 10.1% annualized return of the S&P Small Cap 600 index during this time.

H. B. Fuller’s Direct Purchase and Dividend Reinvestment Plans

H. B. Fuller has both direct purchase and dividend reinvestment plans. Both are open only to current shareholders of Fuller stock. In order to begin participating in the plan, you must purchase shares through a broker and deposit them into the Fuller dividend reinvestment plan. You’ll then be eligible to purchase additional shares directly through the plan and to reinvest your dividends. The minimum amount for additional direct purchases through the plan is $25.

From a fee standpoint, the plans are not favorable to investors. For each direct purchase, you’ll pay either $5 for a purchase by check or $2 for a purchase by direct debit, along with a 6-cent per share commission fee. For purchases by dividend reinvestment, the fee is 5% of the reinvested dividends, up to $5.

When you sell your shares, you’ll pay between $15 and $30 depending on the type of sell order, plus a 12-cent per share commission. You’ll also pay $5 to have the proceeds directly deposited into your account.

Given the fees, it’s most likely better to reinvest dividends through your brokerage account – most will do this for free.

Helpful Links

H. B. Fuller’s Investor Relations Website

Current quote and financial summary for H. B. Fuller Company (finviz.com)

Information on the direct purchase and dividend reinvestment plans for H. B. Fuller Company

 

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