PACCAR Inc. (PCAR - Free Report) announced that its board approved a 14% increase in its quarterly cash dividend on common stock to 32 cents per share from the earlier payout of 28 cents. The revised dividend will be paid on Mar 5 to shareholders of record as of Feb 12, 2019. The board declared an additional cash dividend of $2 per share. The extra dividend will be paid on Jan 4, 2019, to shareholders of record as of Dec 14, 2018.
Over the past 20 years, PACCAR has been increasing its quarterly dividends on an average of 11% a year. The company’s annual dividends comprise of regular quarterly dividends beside additional cash dividends, which totaled roughly 50% of net income in several past years.
Apart from paying regular cash dividends, the company engages in stock repurchase programs. Its board approved a share buyback of worth $500 million. The new buyback program will be effective upon the completion of the existing stock repurchase program worth $300 million. Under the current program, the company is left with $124.8 million from the total amount of $300 million.
PACCAR Inc. Price and Consensus
Notably, PACCAR had cash and cash equivalents of around $2.9 billion at the end of third-quarter 2018 compared with $2.3 billion in the prior-year quarter. A strong cash flow assists the company to reward shareholders through share buybacks and regular dividend payouts.
PACCAR’s Truck and Parts’ divisions are witnessing continuous increases in sales. Of late, the company’s truck delivery is positively driven by increased build rates in North America. Further, a good price realization is offsetting the impacts of material and labor costs. In 2018, PACCAR anticipates Europe’s greater than 16-tonne truck sales to be 310,000 to 320,000 units while Class 8 truck sales in the United States and Canada are expected to be 280,000-290,000 units.
Growing number of PACCAR’s trucks and engines in the market, along with the company’s investments to keep developing technologies and increasing parts distribution capacity, is leading to this revenue escalation and income generation.
Over the past three months, PACCAR’s stock has lost 14.1%, underperforming 9.7% increase recorded by the industry it belongs to.
Zacks Rank & Key Picks
PACCAR currently carries a Zacks Rank #3 (Hold). A few better-ranked stocks in the auto space are Toyota Motor Company (TM - Free Report) , Cooper Tire & Rubber Company (CTB - Free Report) , and General Motors Company (GM - 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.
Toyota has an expected long-term growth rate of 6%. Shares of the company have increased 1.3% over the past three months.
Cooper Tire has an expected long-term growth rate of 4%. Shares of the company have rallied 8% over the past three months.
General Motors has an expected long-term growth rate of 8.5%. Over the past three months, shares of the company have gained 7.7%.
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