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Driven by strong positive outlook, the farm and ranch store retailer, Tractor Supply Company (TSCO - Analyst Report) is going for a 2-for-1 stock split of its common shares in September this year. This move will mark the company’s fourth 2-for-1 stock split since 2002.

Tractor Supply is expected to distribute the additional shares relating to the split on Sep 26 this year to shareholders of record date as of Sep 18, 2013. This will bring Tractor Supply’s total shares outstanding to 139.6 million of a par value of 0.4 cents from 69.8 million of a par value of 0.8 cents as of Jul 27, 2013.

Prior to this, on Aug 1, Tractor Supply declared a quarterly cash dividend of 26 cents per share, payable on Sep 4, 2013 to shareholders of record date as of Aug 19. The company has regularly paid dividends since 2010, when it gave a payout of 7 cents per share to shareholders on Mar 11. Since then, this Zacks Rank #2 (Buy) stock has increased dividend payment more than threefold.

The strength of Tractor Supply’s business model is reflected in its strong cash generation capabilities and commitment to enhance shareholder value. We believe that continued dividend hikes and stock splits will increase investors’ confidence.

Tractor Supply’s strong balance sheet and cash flows provide the company financial flexibility to adopt shareholder-friendly moves, and go for R&D investments as well as business expansions. During the first six months of fiscal 2013, Tractor Supply shelled out $105.4 million on cash dividends and share repurchases. Cash and cash equivalents were $55.7 million as of Jun 29, 2013, while Tractor Supply generated $62.8 million of cash from operational activities. We remain encouraged by Tractor Supply’s strong cash position and its ability to service long-term debts.

In recent times, other companies have also announced stock splits. These include Steven Madden Ltd. (SHOO - Snapshot Report) that announced a 3-for-2 split, while DeVita HealthCare Partners Inc. (DVA - Analyst Report) and West Pharmaceutical Services, Inc. (WST - Snapshot Report) both declared a 2-for-1 split.

Though splitting shares has no real impact on the company’s performance or share prices, it makes shares affordable to small investors. Through stock splits and dividend hikes, companies persuade investors to either buy or hold the scrip instead of selling it. Looking ahead, Tractor Supply remains confident of its growth potential and its ability to boost shareholders’ confidence through dividend payouts and share buybacks.

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