Lowe's Companies Inc. LOW has announced a new $5 billion worth stock buyback program. The new authorization will add to the balance of the existing repurchase authorization, which was $2.4 billion as of Jan 30, 2015.
Also, the company declared a quarterly cash dividend of 23 cents per share payable on May 6, 2015, to shareholders of record as of Apr 22. The dividend yield based on the last closing stock price is 1.2%.
All these initiatives reflect Lowe’s commitment towards shareholder wealth maximization. In fiscal 2014, Lowe’s free cash flow grew 28% year over year to $4 billion. The company’s strong liquidity positions it well for future growth and will also enable to enhance shareholders’ returns.
In the fourth quarter of fiscal 2014, this Zacks Rank #3 (Hold) company repurchased $1 billion worth of its common stock and distributed $225 million as dividends, bringing the total count to $3.9 billion worth of stock repurchases and $822 million as dividends for the full fiscal.
It is common among companies with a stable liquidity position to announce shareholder-friendly initiatives. Apart from Lowe’s, other companies that recently announced such initiatives include Big Lots Inc. BIG, Best Buy Co., Inc. BBY and Foot Locker Inc. FL.
In March, Big Lots’ announced a new $200 million worth of share repurchase authorization along with a 12% increase in dividend. Big Lots completed two share repurchase programs worth $125 million each and initiated a dividend payout in fiscal 2014.
After having abandoned repurchases for some time, Best Buy announced the resumption of share buybacks. The company, under its current $5 billion share repurchase authorization, expects to buy back $1 billion worth of shares over the next three years. Moreover, it announced a 21% hike in its quarterly dividend to 23 cents per share and will be giving out 51 cents per share as a special one-time dividend.
Also, Foot Locker approved a new three-year share repurchase program worth $1 billion, up about 66.7% from the prior level of $600 million, which was successfully completed on Feb 18, 2015. The program will extend through Jan 2018. This marks the third consecutive year in which the company has increased the value of its share buyback program. It also hiked the quarterly dividend by 13.6% to 25 cents.
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