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Superior Industries International, Inc. (SUP - Analyst Report) announced a 12.5% hike in its quarterly cash dividend, raising it to 18 cents per share. The 2 cents per share hike is payable on Oct 18, 2013 to shareholders of record as of Sep 27, 2013.

Superior Industries has already paid the entire dividend of 64 cents per share (based on the old dividend of 16 cents per quarter) for 2013 in an accelerated cash dividend payment on Dec 28, 2012 to shareholders of record as of Dec 21, 2012. The accelerated dividend payment was made to avoid any adverse impact from expected changes in the dividend tax rate.

The full new dividend of 18 cents per share is expected to be declared in the fourth quarter of 2013 and paid in Jan 2014. The increased dividend implies an annualized dividend yield of 406.8%, up from 361.6%, based on Superior Industries’ closing share price of $17.70 as of Aug 26, 2013.

The dividend hike was made possible by the sturdy financial position of Superior Industries and the board’s confidence in the company’s long-term prospects. Apart from the dividend hike, the company is also utilizing its surplus capital to expand its manufacturing capacity by setting up new plants, including the one in Mexico.

Superior Industries has followed a strong capital deployment strategy over the last ten years and did not stop dividend payments even during recession. The company deployed $180 million toward dividend payment in the last 10 years.

Superior Industries currently carries a Zacks Rank #2 (Buy). Some other companies in the original auto and truck manufacturing business that are performing well are American Axle & Manufacturing Holdings Inc. (AXL - Analyst Report), Fuel Systems Solutions, Inc. (FSYS - Snapshot Report) and Gentex Corp. (GNTX - Snapshot Report). All these companies carry a Zacks Rank #1 (Strong Buy).

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