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Louisiana-Pacific (LPX) Rewards Shareholders, Hikes Dividend

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In a shareholder friendly measure, Louisiana-Pacific Corporation (LPX - Free Report) announced a hike of 10% in its quarterly dividend. The move underscores the company’s sound financial position and its commitment to reward shareholders.

Louisiana-Pacific raised quarterly dividend to 16 cents per share (or 64 cents annually) from 14.5 cents per share (58 cents annually). The amount will be paid out on Mar 8, 2021 to shareholders of record as of Feb 22.

Factors Supporting Dividend Hikes

Louisiana-Pacific has been consistently enhancing shareholders’ return through share repurchases and dividends. In the first nine months of 2020, the company paid $49 million worth of dividends and $29 million to repurchase stocks. The company is committed toward enhancing shareholders’ value through dividend payments.

After paying for dividends and share repurchases, the company ended third-quarter 2020 with nearly $1 billion of liquidity, including $420 million in cash. Notably, its cash and cash equivalents increased to $420 million from $181 million reported at June-end.

Its total long-term debt (including non-current operating lease liabilities) was $380 million at September 2020-end, essentially unchanged from June-end. Total debt to capital decreased to 23.4% at third quarter-end from 26% at June-end. Encouragingly, the company does not have any future obligations under the $550-million revolving credit facility and 4.875% Senior Notes until May 1, 2023.

The company intends to return at least 50% of cash flow from operations in excess of capital expenditures to its shareholders over time in order to sustain core business, and grow Siding and value-added Oriented Strand Board or OSB.

Going ahead, the company's accelerating revenue growth across its business segments and margin expansion are likely to drive operating cash flow. This, in turn, will enable Louisiana-Pacific to expand its capital deployment initiatives including dividend payouts, share repurchases and reinvestments, which will grow its businesses.

Investors always prefer an income-generating stock. Hence a high-dividend-yielding one is obviously much coveted. It goes without saying that stockholders are always on the lookout for companies with a track record of consistent and incremental dividend payments to bet on.

Price Performance

Shares of the company have gained 33.2% in the past six months, compared with the industry’s rally of 26.8%. The trend is likely to continue, given strong SmartSide strand performance, increase in OSB pricing, and favorable resin costs. Operational efficiency, cost-containment efforts and resilient housing market prospects will drive growth.

Zacks Rank & Other Key Picks

Louisiana-Pacific currently carries a Zacks Rank #1 (Strong Buy).

Some other top-ranked stocks in in the same industry include Weyerhaeuser Company (WY - Free Report) , UFP Industries, Inc. (UFPI - Free Report) and Boise Cascade Company (BCC - Free Report) . While Weyerhaeuser sports a Zacks Rank #1, UFP Industries and Boise Cascade carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Weyerhaeuser earnings for 2021 are expected to increase 28.7%.

UFP Industries and Boise Cascade have a trailing four-quarter earnings surprise of 32.8% and 48.2%, on average, respectively.

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