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Cintas Raises Dividend by 7% Despite COVID-19 Impact

Cintas Corporation (CTAS) is North America’s leading provider of corporate identity uniforms and a significant provider of related business services, including entrance mats, restroom cleaning services and supplies, first aid and safety services, and fire protection products and services.

The company generated more than 80% of its revenue from uniform rental and facility services, 11% from first aid and safety services, 6% from fire protection services, and 2.7% from uniform direct sales during the quarter ended November 30, 2020.

While the company’s primary focus is in the United States, it also operates in Canada, Latin America, Europe and Asia.

Lower Than Expected Losses

The COVID-19 pandemic had a significant impact on Cintas during the first half of fiscal 2021 when it was forced to close many of its facilities and customers shut down their operations. While the company isn’t providing forward guidance due to the pandemic, the vaccine rollout in the United States and Europe has been a cause for optimism.

The company reported fiscal second-quarter revenue that fell by 4.3% to $1.76 billion due to the pandemic, but those figures beat consensus estimates by about $10 million. On the bottom line, the company reported GAAP earnings of $2.62 per share, mainly due to a 50-basis point increase in gross margins, which came in above consensus expectations by 43 cents.

The company switched its dividend from an annual dividend to a quarterly dividend and raised its payout by 6.8% to $0.75 per share, which represents a 0.9% forward yield. The dividend is payable on March 15, 2021, to shareholders on record as of February 15, 2021.

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