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Monsanto Company (MON - Analyst Report), an agricultural products manufacturer, has recently announced a quarterly dividend hike. The company will be utilizing its free cash to boost stakeholders’ returns.

The company raised its quarterly dividend by 14.7% to 43 cents (or $1.72 annually) from 37.5 cents a share (or $1.50 annually). The increased dividend will be paid on Oct 25, 2013, to shareholders of record as of Oct 4. This is the fourth dividend hike by Monsanto since 2010, which has resulted in a cumulative increase of roughly 60%.

Monsanto last hiked its quarterly dividend to 37.5 cents from 30 cents in Aug 2012, reflecting an increase of 25%.

Monsanto has been rigorously taking steps to increase shareholders’ values. In June this year, the company announced a $2.0 billion share repurchase program, spread over three years. 

The company’s commitment toward increasing shareholders’ returns reflects its free cash flow-generating capability, sound liquidity position and defined future prospects.

Monsanto boasts a strong balance sheet, with cash and cash equivalents of $2.9 billion, exiting the third quarter of fiscal 2013. The company expects to generate high cash flow of $1.8 billion to $2.0 billion for full fiscal 2013.

Looking ahead, the company remains confident of its growth potential, suggesting enhanced value for shareholders.

We expect Monsanto to benefit from the rise in the corn seed portfolio pricing in fiscal 2014, leading to higher revenues.  

Monsanto currently carries a Zacks Rank #3 (Hold). Other stocks worth reckoning in the chemical industry include The Andersons, Inc. (ANDE - Analyst Report), KMG Chemicals Inc. (KMG - Snapshot Report) and Limoneira Co. (LMNR - Snapshot Report). Each of these companies carry a Zacks Rank #2 (Buy).

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