Packaging Corporation of America (PKG - Free Report) recently approved a 25% hike in its regular quarterly dividend. The company will now reward shareholders with a dividend of 79 cents per share compared with the previous payout of 63 cents. The increased dividend will be paid on Jul 13, to shareholders of record as on Jun 15, 2018.
Based on the increased rate, the annual dividend comes to $3.16 a share, resulting in an annualized yield of about 2.7%, considering Packaging Corporation’s closing price of $119.04 on May 16. Though this is lower than the industry average of 2.1%, the hike will increase investors’ confidence in the stock.
The current dividend hike came after two years. Packaging Corporation had earlier announced a 15% hike in quarterly dividend in August 2016. Notably, the hike in dividend is in sync with the company’s balanced and disciplined capital-allocation strategy.
During first-quarter 2018, Packaging Corporation paid $59.4 million of dividends to shareholders. It ended the quarter with $102 million of cash in hand.
Packaging Corporation expects demand in the Packaging segment to remain strong in second-quarter 2018, resulting in higher corrugated products and containerboard shipments. The company witnessed strong demand in domestic and export markets during the first quarter. The company will also gain from the previously-announced price increases in the Packaging segment.
Share Price Performance
In the past year, Packaging Corporation has significantly outperformed the industry with respect to price performance. The stock has gained around 18%, while the industry recorded growth of 4%.
Zacks Rank & Key Picks
Packaging Corporation carries a Zacks Rank #3 (Hold).
A few better-ranked stocks in the same sector are Axon Enterprise, Inc (AAXN - Free Report) , Applied Industrial Technologies, Inc. (AIT - Free Report) and Ashtead Group PLC (ASHTY - Free Report) . All three stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Axon Enterprise has an expected long-term earnings growth rate of 25%. The company’s shares have appreciated 121%, in the past year.
Applied Industrial Technologies has a long-term earnings growth rate of 12%. The company’s shares have rallied 20% over the past year.
Ashtead Group has an expected long-term earnings growth rate of 15%. The stock has surged 54% in a year’s time.
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