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In an effort to provide incremental returns to shareholders, the board of directors at Apogee Enterprises, Inc. (APOG - Analyst Report) approved an 11% increase in its quarterly dividend to 10 cents. Shares of Apogee rose around 0.3% and closed at $36.87 at the end of trading on Jan 17 after this announcement.

Apogee will now pay 10 cents per share to shareholders, a penny more than the prior payout of 9 cents. The dividend increase came after 2 years. The new dividend is payable on Feb 21, 2014 to shareholders of record as of Feb 6, 2014.

The company has raised its dividend 4 times since 2008. A regular disbursement of dividends with occasional hikes has been a common phenomenon for Apogee. This reflects the company’s practice of rewarding shareholders over time and suggests a healthy balance sheet and strong cash position.

Apogee had cash and short-term investments of $22.5 million at the end of the reported quarter compared with $87.5 million at the end of fiscal 2013. The decline in cash was mainly due to the acquisition of Alumicor Ltd., a fabricator of aluminum storefront, entrance, curtainwall and window products for the Canadian commercial industry for $52 million.

For fiscal 2014, Apogee believes that current cash on hand as well as expected cash from future operating activities will be adequate to fulfill the working capital requirements and meet planned capital expenditures and dividend payments.

Apogee raised the lower end of its earnings guidance and now expects earnings in the band of 95 cents to $1.00 per share for fiscal 2014. The company also projects annual sales growth in the range of 10%–11%.

Apogee targets $1 billion in revenues by the end of fiscal 2016. The company also expects to achieve 10% operating margins on the back of its focus on productivity and operational improvements.

However, macroeconomic challenges will likely continue to be a headwind for Apogee. Additionally, moderating global economic growth and economic uncertainty could reduce the company’s near-term revenue visibility.

Apogee Enterprises is a leader in technologies for the design and development of value-added glass products, services and systems. Apogee currently carries a Zacks Rank #3 (Hold).  

Some better-ranked stocks worth considering in the industrial product sector include Altra Industrial Motion Corp. (AIMC - Snapshot Report), ARC Document Solutions, Inc. (ARC - Snapshot Report) and AptarGroup, Inc. (ATR - Analyst Report). All of these have a Zacks Rank #2 (Buy).

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