Georgia-based Flowers Foods Inc. (FLO - Snapshot Report) recently increased its quarterly dividend by 6.7% to 16 cents from 15 cents per share paid previously. The increased dividend equates to an annual payout of 64 cents per share. The increased dividend will be paid on June 29 2012, to stockholders of record as of June 15, 2012.
Flowers Foods has a consistent track record of paying dividends and the latest hike brings the forward annual dividend yield, as of June 4, 2012, to 2.78%. Earlier, Flowers Foods had increased its quarterly dividend by 12.5% to 15 cents per share in May last year to boost shareholder value.
In a concerted effort to enhance shareholders’ value, the producer and maker of bakery products in the United States also has a share buy back program in place. In the first quarter of 2012, the company repurchased approximately 70,742 shares for $1.4 million. Since the inception of the share repurchase plan, the company has purchased 37.9 million shares for an average of $11.41 per share, totaling $432.2 million.
Flowers Foods possesses a strong balance sheet and is well placed financially. At the end of the first quarter of 2012, the company’s cash and cash equivalent increased sequentially to $186.1 million from $7.8 million. We believe that the company has enough cash to provide optimum shareholder value.
We appreciate Flowers Food’s efforts to consistently enhance long-term shareholder value even amid an economic downturn. We believe that an increase in dividend payment affirms the company’s optimistic outlook and depicts that it is heading toward strong future growth.
In addition, the company also recently inked a deal to buy Lepage Bakeries, a private company based in Auburn, Maine for $370 million in cash and stock. Management expects the acquisition to expand its footprint in New England and New York.
Flowers Food, which competes with Campbell Soup Co. (CPB - Analyst Report) , carries a Zacks #3 Rank, implying a short-term Hold rating. Besides, we are also maintaining our long-term Neutral recommendation on the stock.