IAC/InterActive on fast track and pays dividend


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Paying a dividend doesn't have to mean a company has given up on fast growth.

IAC/InterActiveCorp ( IACI ), for example, is No. 1 in its Internet-Content industry group with a 99 Composite Rating.

Growth has been fast. In the past two years, earnings leapt 64% and 133%. Revenue stepped up 22% and 26% in the same period. Over the past 20 years, no two-year period for IACI had better numbers with the exception of 2002-03.

IAC announced in November that it would begin paying a dividend.

At the Nov. 3 earnings call, Chairman and Senior Executive Barry Diller said, "Anyone who thinks that this is not a growth company ...simply because we declare a dividend, I think is awfully foolish."

Diller added that other companies in similar circumstances should be buying back shares and repatriating cash to shareholders.

At the Q2 earnings call Wednesday, Chief Financial Officer Jeffrey Kip said the company prefers to keep "$500 million to $750 million of cash readily available."

As of June 30, the company had $945.8 million in cash, cash equivalents and marketable securities.

Kip added that IAC has "almost no debt." He noted the quarterly dividend was being doubled from 12 cents a share to 24 cents but said IAC had more to do "to catch up and we'll look to increase it probably on an annual basis."

The annualized yield is 1.8%.

IAC arguably could be regarded as in its strongest growth situation over the past 20 years. The company only once has put together three annual earnings increases in a row -- 2001-03 (and 2001 was compared against a loss).

The Street expects earnings to increase 24% this year and 25% in 2013. Together with 2010-11, that would make for four increases in a row.

Earnings, which historically have been inconsistent, are showing signs of becoming more stable. The five-year EPS Stability Factor is 96 -- close to a worse possible 99. But the three-year rating is 45 -- not ideal but certainly an improvement.

IAC operates 50 Internet businesses, including Ask.com, Dictionary.com and Match.com.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

This article appears in: Personal Finance Investing Ideas
Referenced Stocks: IACI

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