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CF Industries Rises on Dividend Hike

POT CF SMG

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CF Industries Inc. (CF - Analyst Report) shares rose as much as 3.3% after it announced a 150% hike in its quarterly cash dividend. The company’s Board has cleared a quarterly dividend raise to $1.00 per share from 40 cents per share. CF Industries’ shares eventually closed at $215.16 on the day following the news release, gaining around 2.7%.

CF Industries will pay the dividend on Nov 29, 2013, to shareholders of record as of Nov 15, 2013. The company last increased its quarterly dividend in Aug 2011 when it hiked its dividend four times to 40 cents per share from 10 cents per share. The hike in dividend is part of CF Industries’ strategy to provide long term benefits to its shareholders.

CF Industries released its second quarter 2013 results in August. The company’s adjusted earnings (excluding one-time items) of $8.53 per share in the quarter dropped from the year-ago earnings of $8.71 a share, but it exceeded the Zacks Consensus Estimate of $7.79. Including one-time items, the company earned $8.38 a share in the quarter, down 10% from $9.31 a share in the year-ago quarter.

Sales were down 1.7% to $1,714.9 million in the quarter from $1,735.6 million in the prior-year quarter. But it surpassed the Zacks Consensus Estimate of $1,685 million.

CF Industries, which is among the prominent players in the fertilizer industry along with Potash Corp of Saskatchewan Inc. (POT - Analyst Report), expects to benefit from a number of factors that support its growth and cash generation potential. Global population growth, a shift toward higher protein diets and continued use of crops as a source of renewable fuels are increasing the need for more grain and higher use of plant nutrients.

CF Industries currently retains a Zacks Rank #4 (Sell) and is scheduled to release its third-quarter 2013 results on Nov 4.

Other companies in the fertilizer industry worth considering are China Bluechip ADR , and The Scotts Miracle-Gro Company (SMG - Snapshot Report). Both hold a Zacks Rank #1 (Strong Buy).

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