Weyerhaeuser Company’s (WY - Analyst Report) Board of Directors approved a 13.0% hike in the company’s quarterly dividend rate. The revised quarterly rate now stands at 17 cents per common share compared with 15 cents previously, resulting in an annual rate of 68 cents per common share. The revised dividend will be paid on November 30 to shareholders of record as of the close of business on November 9.
The company has been following a consistent policy of returning cash to its shareholders through payment of regular cash dividends since 1974. In addition to its regular dividend payments, the company in July 2010, paid Special Dividend amounting to $26.41 per share.
Recovery witnessed in the U.S. housing market is working in favor of Weyerhaeuser. The impact was also witnessed in the company’s second quarter 2012 results with revenue increasing 11% on the back of stellar performances in the Wood Products and Real Estate businesses. Cash balance hiked 18%.
We believe as U.S. housing market is showing signs of revival, the demand for wood products; and in turn, domestic timbers are likely to strengthen. Backlog for Real Estate remains solid while single-family home closings are likely to improve. All these positives are likely to generate solid cash for the company, which can be utilized for rewarding shareholders via dividend payments or share repurchases.
Weyerhaeuser is one of the leading US forest product companies with approximately 6 million acres of timberland in North America. The company is scheduled to report its third quarter 2012 on October 26, 2012.
The current Zacks Consensus Estimate for the third quarter of 2012 is 17 cents, representing a year-over-year growth of 38.9%. Estimates for 2012 and 2013 are 41 cents and 86 cents, reflecting annual growth of 25.6% and 106.5%, respectively.
We currently maintain a Neutral recommendation on Weyerhaeuser. The stock also bears a Zacks #2 Rank, implying a short-term Buy rating. The company’s prime competitors International Paper Co. (IP - Analyst Report) and Louisiana-Pacific Corp. (LPX - Snapshot Report) also bear a Zacks #2 (Buy) Rank.