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Capella Education Declares 5.1% Quarterly Dividend Hike

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In a bid to impress investors, Capella Education Company’s board of directors approved 5.1% hike in its quarterly cash dividend to 41 cents per share. The dividend will be paid on Jan 13, 2017 to shareholders of record as on Dec 22, 2016. The new figure will add up to an annual dividend of $1.64 per share.

This increase marks Capella Education’s third consecutive year of dividend hike. The company made the last dividend increase of 5.4% in Dec 2015. Prior to that, it increased dividend by 5.7% in Dec 2014.

Consistent dividend hikes serve as an indicator of a company’s financial stability and also its substantial profitability, as dividends are paid out of its retained earnings. As on Sep 30, 2016, the company had cash and marketable securities of $163.5 million, compared with $159.3 million as on Dec. 31, 2015, and no debt for the same period.

Capella University’s programs offer a high-quality educational experience, which drives strong outcomes. The company continuously invests in the introduction of new programs and specializations to improve student outcomes.

Continuous innovations and course updates expand its product portfolio, which in turn boost enrollments and drive long-term growth. The company is focusing on providing programs based on a “competency-based learning model and direct assessment capabilities”, like FlexPath and RightSkill.

FlexPath, which is the company’s fastest growing programs, now accounts for 12% of bachelor and master's total enrollment. As more and more students are now opting for the FlexPath direct assessment programs, the company expects increased enrollment in bachelors and masters under the program in the near term, which should drive top line results.

Moreover, the company’s focus on non-degree programs is encouraging and should boost the top line over the long haul. Capella expects the Hackbright Academy and DevMountain acquisitions to contribute to revenues in the near term.

Meanwhile, shares of Capella Education gained over 92% year to date, outperforming 29.2% growth for the Zacks categorized School industry. The price performance is backed by a favorable estimate revision. Estimates for the current year have moved up 5.3% over the last 60 days. Moreover, Capella Education’s earnings surpassed the Zacks Consensus Estimate in each of the trailing four quarters with an average beat of 10.89%.



We believe that the recent dividend hike will further bolster investor confidence in the company’s financials, improve its market position against competitors and lend more upside to the stock.

Zacks Rank & Other Key Picks

Capella Education carries a Zacks Rank #2 (Buy).

Other favorably ranked stocks in the school industry include TAL Education Group (TAL - Free Report) , Universal Technical Institute, Inc. (UTI - Free Report) and DeVry Education Group Inc. (DV - Free Report) .

TAL Education’s earnings are expected to increase 0.8% in fiscal 2017.It sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

DeVry – a Zacks Rank #2 stock – is expected to see a 5.7% increase in fiscal 2017 earnings.

Universal Technical, also a Zacks Rank #2 company, is expected to witness 20.5% decline in fiscal 2017 earnings.

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