Weyerhaeuser Company (WY) recently declared that it has received its board of directors’ approval for an increase of 32% or 7 cents in the quarterly dividend rate and a $700 million share buyback program. The twin news indicates the company’s healthy cash position and its commitment towards enhancing shareholders’ return.
The present quarterly dividend rate stands at 29 cents, up from the prior 22 cents. The new dividend will be paid on Sep 12, 2014 to shareholders of record on Aug 29. The revised quarterly rate equates to an annualized dividend rate of $1.16 per share.
In addition to the equity dividend, Weyerhaeuser declared dividend on its 6.375% Mandatory Convertible Preference Shares, Series A. Dividend of roughly $0.7969 per share will be paid on Oct. 1, 2014, to shareholders of record on Sep 15.
Concurrent with the dividend news, Weyerhaeuser declared a $700 million share buyback program, replacing its existing repurchase authorization.
In the last five years, dividend payments have soared 261% to $458 million in 2013. The quarterly dividend rate was hiked twice last year — 18% in Apr 2013 and 10% in Aug 2013. In the long run, Weyerhaeuser has a dividend payout target of up to 75% of funds available for distribution.
Also, the company has retired 59 million common shares as part of the divestiture of its real estate business to Tri Ponte Homes, Inc. (TPH). This will result in lower share count for third-quarter 2014 and in turn, will boost earnings per share in the quarter.
Weyerhaeuser Company is one of the leading U.S. forest product companies with operations primarily concentrated in Southern California, Nevada, Washington, Texas, Maryland and Virginia. The company faces stiff competition from other players in the industry including Boise Cascade Company (BCC) and United Rentals, Inc. (URI).
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