Leading packaging and paper manufacturer, International Paper Company (IP - Free Report) recently increased its quarterly dividend by 5% year over year to 46.25 cents per share. The proposed dividend for fourth-quarter 2016 is payable on Dec 15 to shareholders of record at the close of business on Nov 15.
Based on the closing price of $45.72 on Oct 11, 2016, the increased dividend offers a yield of 4.0%. A steady dividend payout is part of the long-term strategy of International Paper to provide attractive risk-adjusted returns to its stockholders. In addition, decent dividend increases at periodic intervals have been one of the company’s most attractive features.
The current dividend increase further reflects the inherent strength of International Paper’s business and due diligence of management to generate long-term profitability and sustainable free cash flow.
Historically, International Paper has consistently returned significant cash to its shareholders through dividends and share repurchases. As of Jun 30, 2016, International Paper has repurchased 44.6 million shares at an average price of $46.40 each, for approximately $2.1 billion.
International Paper aims to utilize its sound cash flow by investing in capital projects, indulging in acquisitions, reducing its total debt and returning a greater proportion of cash to shareholders through increased dividend payouts and share repurchases. The company expects its EBITDA to increase by approximately 5% in the near future through diligent execution of its operational plans.
Headquartered in Memphis, TN, International Paper has manufacturing operations in North America, Europe, Latin America, Russia, Asia, and North Africa. The company employs approximately 58,000 people and is strategically located in more than 24 countries serving customers worldwide.
International Paper’s best-in-industry talent pool and expertise are expected to offer optimal and affordable solutions, thus giving it an edge over its peers. International Paper expects to meet its capital expenditures, service existing debt and meet working capital and dividend requirements during 2016 through current cash balances, cash from operations, and existing credit facilities.
International Paper presently has a Zacks Rank #2 (Buy). Some other favorably ranked stocks in the industry include Fibria Celulose S.A. (FBR - Free Report) , KapStone Paper and Packaging Corporation (KS - Free Report) and UPM-Kymmene Oyj (UPMKY - Free Report) , each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Fibria has a healthy earnings surprise history with an average positive earnings surprise of 24.6% in the trailing four quarters, comprehensively beating estimates thrice.
KapStone has a long-term earnings growth expectation of 6% and is currently trading at a forward P/E of 16.9x.
UPM-Kymmene has a long-term earnings growth expectation of 5% and is currently trading at a forward P/E of 12.5x
Confidential from Zacks
Beyond this Analyst Blog, would you like to see Zacks' best recommendations that are not available to the public? Our Executive VP, Steve Reitmeister, knows when key trades are about to be triggered and which of our experts has the hottest hand. Click to see them now>>