The past year has not been good for Corning (GLW) . Shares are down about 13%, while the S&P 500 is up about 20%. Year to date GLW is in the hole as well (-3%), while the S&P has risen about 4%. Its been an out of favor value name that has not garnered the attention (or returns) of the large tech names that have been the shiny objects lining investors pockets.
Shares hit a 3-year low last week, but have been recovering in the wake of better than expected fourth quarter earnings (46 cents vs. 44 cent estimate), and guidance for the next three years that suggests 6%-8% compound annual sales growth, and 12%-15% annual compound earnings growth.
Yet the story, for those wanting to buy and hold a somewhat inexpensive dividend grower, remains compelling, but certainly not sexy. GLW currently trades at about 14x next years' consensus estimates, and now yields 3.1% following Wednesday's announced 10% quarterly dividend increase to 22 cents/share.
That's the ninth consecutive year that GLW has increased the dividend, and during that period it has grown at an 18% compound annual growth rate. But GLW has also returned capital to shareholders in another way, through share buybacks. Since year-end 2012, the company has reduced shares outstanding from 1.452 billion to 775 million, representing a 47% decrease.
The company has indeed focused on returning capital to shareholders through its 2016-2019 Strategy and "Capital Allocation Framework" (a total of $12.5 billion), and its new 2020-2023 "Strategy & Growth Framework" in which GLW is aiming to return another $8 billion-$10 billion. With total dividend payments running at about $700 million/year, that would imply another $5 billion-$7 billion in share repurchases over the next five years.
Now, it is impossible to predict how many shares GLW will actually repurchase over the next four years, and at what price, or if the company can deliver. But, assuming it can, at $30/share, GLW could be reducing shares outstanding by another 170 million to 250 million, conceivably reducing shares outstanding by up to another 33%. Simultaneously, the dividend could continue to grow at a 10% annual clip, but time will tell.