On Feb. 4, Quest Diagnostics Incorporated (NYSE:DGX) announced that it would be raising its dividend payment by 10.7%. Its quarterly payments would now be $0.62, up from $0.56. This marks the 10th time the company has increased its dividend payments since 2011.
On an annual basis, this means investors will be earning 2% in dividend income. On a $25,000 investment, you could expect to earn about $500 every year. And that number will go up if Quest announces more rate hikes.
There’s even more good news for investors as Quest’s Board also gave the green light for more share repurchases, increasing the current authorization by $1 billion. Share repurchases are valuable to investors because they help increase a stock’s value. And with fewer shares outstanding, earnings multiples look better as well, which could drive more bullishness around a stock if investors see a better bottom line.
In the past 12 months, Quest’s stock has risen 13%. The company’s testing business has been doing well amid the pandemic as volumes have been on the rise. In its fourth quarter, Quest reported year-over-year sales growth of 55.8%, hitting the $3 billion mark. Net income of $609 million was also more than double the $265 million profit the company posted a year ago.
With Quest’s stock trading at a relatively modest price-to-earnings ratio of 12, it still makes for a reasonably cheap investment. And with lots of potential growth still on the way as the pandemic is still far from over, Quest could continue to be a great buy in 2021 and beyond.