Neenah Paper, Inc. (NP) recently announced a 13% increase in its quarterly dividend to 27 cents per share. This cheered investors’ sentiment and the share price increased 1.06 % on Friday, May 23.
On an annualized basis, the dividend will increase from 96 cents to $1.08 per share. Incremental dividend payments form an integral part of Neenah Paper’s long-term strategy to provide attractive risk-adjusted returns to its stockholders. The proposed dividend translates into a yield of 2.2%, based on the closing price of $48.70 on May 23, 2014. With this latest dividend, the company continues to move towards its target dividend yield of over 3%.
Also the company announced that it has authorized a share repurchase program to repurchase up to $25 million of its outstanding common stock over the next twelve months. The share buyback will help the company reduce its outstanding share count, thereby increasing earnings per share and return on equity.
Neenah Paper’s financial strength enables it to continue with its buyback program and dividend payouts. As of Mar 31, 2014, the company’s cash and cash equivalents were $77.2 million and cash from operations stood at $14.8 million. The increased repurchase authorization and steady dividend payouts are expected to boost investors’ confidence in the stock. Neenah Paper’s strategy to return wealth to shareholders demonstrates its growth potential and stable liquidity position.
Neenah Paper sells technical products and fine papers globally. The products include specialized substrates used for tapes labels and other products and high-end printing papers for a variety of end markets.
Neenah Paper presently has a Zacks Rank #4 (Sell). Other players in the industry worth reckoning include Crown Holdings Inc. (CCK) with a Zacks Rank #1 (Strong Buy) along with Graphic Packaging Holding Company (GPK) and Unilever NV (UN), both carrying a Zacks Rank #2 (Buy).
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