Chicago Bridge & Iron Co. N.V. (CBI) recently announced a 40% increase in its quarterly dividend to 7 cents from 5 cents per share paid on Dec 18, 2013. The increased dividend will be paid on Mar 31, 2014 to shareholders of record on Mar 21. Based on the closing share price of $79.86 on Feb 20, 2014, the new dividend implies a dividend yield of 0.35%.
Though this substantial hike came after an interval of three years, the news failed to move investors’ sentiments as the company’s stock price decreased 0.1% on the day, possibly because of the its still poor dividend yield. Even after the hike, CBI’s yield is far below the industry average of 1.44%.
Its previous dividend increase took place on Mar 16, 2011, when it was had raised the payout to 5 cents from 4 cents per share.
This latest dividend increase is supported by the company’s modest cash and cash equivalents which stood at $543.0 million at the end of the last reported quarter (third-quarter 2013). Also, the company ended the third quarter with a healthy backlog level of $24.5 billion, which reflected its strong revenue generation capacity.
Recently, the company received a couple of new contracts from CF Industries and Kuwait National Petroleum Company. The aggregate value of these contracts is approximately $470 million. Moreover, on Feb 5, it had received a fabrication contract from The Dow Chemical Co. (DOW) for an undisclosed amount.
The company’s operational performance will be fueled by the growing global demand for energy infrastructure, especially in the LNG gas processing and oil sands markets. This, in turn, is expected to fortify its financial position going forward. With approximately 107.3 million shares outstanding at the third quarter-end, the company needs to dish out $30.0 million annually as dividend.
CBI currently carries a Zacks Rank #4 (Sell). Some better-ranked stocks in the heavy industries sector include Orion Marine Group, Inc (ORN) and Quanta Services, Inc. (PWR). Both of these have a Zacks Rank #2 (Buy).
To read this article on Zacks.com click here.
Get all Zacks Research Reports and be alerted to fast-breaking buy and sell opportunities every trading day.
Be the first to comment