Packaging company Silgan Holdings Inc. (SLGN - Analyst Report) raised its quarterly dividend by 7.1% to 15 cents per share. Annualized, this represents a payout of 60 cents per share and equates to a dividend yield of roughly 1.2%. The raised quarterly dividend will be paid on Mar 28, 2014, to shareholders of record as of Mar 14, 2014.
Silgan has hiked its dividend exactly after a year. The company, in Mar 2013, raised its payout by 16.7% to 14 cents per share. Silgan has regularly hiked its dividend every year since 2004.
Silgan paid a dividend of $36.2 million in 2013. Silgan’s practice of distributing incremental dividends supports its commitment to improve shareholders’ value.
Among Silgan’s peers, Mobile Mini, Inc. (MINI - Snapshot Report) initiated a quarterly dividend of 17 cents per share last year with a dividend yield of 1.5%. On the other hand, Crown Holdings Inc. (CCK - Analyst Report) does not pay any dividend.
In addition, Silgan’s board has sanctioned the repurchase of additional common stock worth up to $300 million, inclusive of prior authorizations. The buyback program expires on Dec 31, 2019.
The dividend increase and share repurchase came on the back of Silgan’s healthy performance in 2013. For full-year 2013, Silgan reported record adjusted earnings per share of $2.77, up 2.5% from $2.70 in 2012. Earnings were in line with the company’s guidance range of $2.75 to $2.85 per share. The improved year-over-year performance was driven by increased volumes in the metal container business.
However, Silgan ended 2013 with cash and cash equivalents of $160.5 million, down from $465.6 million in 2012. The debt-to-capitalization ratio remained at an increased level of 70% as of Dec 31, 2013.
For 2014, Silgan expects adjusted earnings per share in the range of $3.10 to $3.30. For the first quarter of 2014, the company guided adjusted earnings per share in the band of 45 cents to 55 cents.
Silgan continues to bolster profitability through increased productivity and cost reduction measures like the newly initiated Can Vision 2020. Moreover, strategic acquisitions and the expansion of footprint will expectedly aid long-term growth. On the flip side, soft demand in Europe, pricing pressure and a high debt-to-capitalization ratio remain concerns.
Stamford, Conn.-based Silgan is a leading manufacturer of consumer goods packaging products, operating 81 manufacturing facilities in the Americas, Europe and Asia. In North America, the company is the largest supplier of metal containers for food products and a major supplier of plastic containers for personal care products.
Currently, Silgan has a Zacks Rank #3 (Hold). Another stock worth considering in the same sector is Ball Corp. (BLL - Analyst Report) with a Zacks Rank #1 (Strong Buy).