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Recently announced, Packaging Corporation of America (PKG - Snapshot Report) increased the value of its quarterly cash dividend on its stock from 80 cents per share to $1.00 per share. The company is scheduled to pay its first quarter dividend of 25 cents per share on April 13, 2012 to its shareholders of record as of March 15, 2012.
In 2011, Packaging Corp. paid dividends of $76 million to its common stock shareholders and also repurchased a total of 4.8 million share of its common stock at $25.00 per share during the year. Furthermore, during the final quarter of 2011, the company announced its decision to repurchase another 150 million shares from its outstanding stock.
Packaging Corp. had a cash balance of $156.3 million at the end of its December quarter of 2011 and it generated close to $109 million from operating activities during the quarter. It is reasonable to infer that the favorable cash position earned by the company fuels its continual dividend appraisals and buy-back activities.
Being continually solicitous of investors’ interests has been an attribute of Packaging Corp. which is also of surmountable importance to the company over time. This is explicit from its actions. Moreover, these ventures also make the company’s strong financial position quite lucid to external parties.
The company currently seems to be in quite a formidable position to face its ominous competitors like China Shengda Packaging Group, (CPGI), Bemis Company, Inc. (BMS - Analyst Report) and Graphic Packaging Holding Co. (GPK - Snapshot Report).
We find it wise to aver a Zacks#2 rank for the short run on Packaging Corp. which translates into a short-term rating of Buy. However, we currently have a long-term Neutral recommendation on the company’s stock.
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