Leading packaging and paper manufacturer, International Paper Company (IP - Free Report) recently increased its quarterly dividend by 2.6% year over year to 47.5 cents per share. The proposed dividend for fourth-quarter 2017 is payable on Dec 15 to shareholders of record at the close of business on Nov 15.
Based on the closing price of $57.39 on Oct 11, the increased dividend offers a yield of 3.3%. 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, 2017, the company has repurchased 44.6 million shares at an average price of $46.40 each, for approximately $2.1 billion. The company has underperformed the industry with an average year-to-date return of 8.2% compared with a 13.4% gain for the latter.
International Paper aims to utilize its sound cash flow by investing in capital projects, indulging in acquisitions, reducing 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 approximately 5% in the near future through diligent execution of its operational plans.
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. It expects to meet its capital expenditures, service existing debt and meet working capital and dividend requirements during 2017 through current cash balances, cash from operations and existing credit facilities.
International Paper presently has a Zacks Rank #3 (Hold). Better-ranked stocks in the industry include UPM-Kymmene Oyj (UPMKY - Free Report) , Veritiv Corporation (VRTV - Free Report) and Stora Enso Oyj (SEOAY - Free Report) , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
UPM-Kymmene Oyj has a long-term earnings growth expectation of 3.2%.
Veritiv has a long-term earnings growth expectation of 21.9%.
Stora Enso has a long-term earnings growth expectation of 9%.
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