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Avnet, Inc. (AVT) - $25 value - yours FREE >>
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Avnet (AVT) Hikes Dividend, Boosts Shareholders' Wealth
Avnet (AVT - Free Report) recently raised its quarterly dividend rate, in sync with its strategy of enhancing shareholders’ wealth. This move is surely to cheer investors as it comes at a time when uncertainties related to the coronavirus pandemic still prevail.
The Phoenix, AZ-based company’s board has authorized a 9.1% hike in its quarterly dividend to 24 cents per share, bringing the annualized dividend rate to 96 cents per share. This marks an increase of two cents from the prior payout rate of 22 cents a share.
The new dividend will be payable on Sep 21 to shareholders of record as on Sep 7, 2021. Markedly, this is the eighth time that Avnet has raised the dividend rate since it restarted paying in September 2013.
The company’s strong balance sheet and cash flow provide it with the financial flexibility to undertake shareholder-friendly initiatives and invest further to expand in newer markets. The company generated operating cash flow of $90.9 million in fiscal 2021, and ended the period with cash and cash equivalents of nearly $199.7 million.
We believe, apart from strategic investments, continued focus on such shareholder-friendly initiatives will drive the company’s shares. Some other companies with a consistent track record of returning excess cash through share repurchases and dividend are Apple (AAPL - Free Report) , Target Corporation (TGT - Free Report) and Cisco Systems (CSCO - Free Report) .
Besides, apart from enhancing shareholder returns, these initiatives raise the market value of the stock. Companies boost investor confidence through share repurchases and dividend payouts, persuading them to either buy or hold the scrip.
Avnet is benefiting from robust demand for its products in the communication and defense market. Its continued focus on boosting Internet of Things capabilities are helping it expand in newer markets and gain customers.
The firm’s cost-saving efforts are driving profitability as well. Avnet’s expanding partner base is likely to boost top-line growth. It expects to replace the Texas Instruments revenues with higher-margin revenues by the end of fiscal 2022. Acquisitions like Witekio and Softweb are also positives.
Avnet currently carries Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.