Agricultural chemicals manufacturer Monsanto Company (MON) recently received its board of directors’ approval for increasing its dividend payout to 49 cents per share or $1.96 on an annualized basis. Representing a 14.0% hike compared with the previous dividend of 43 cents per share, the increased dividend will be paid by Monsanto on Oct 31 to shareholders of record on Oct 10.
With the latest rise, the company has increased its dividend five times since fiscal 2010, recording a cumulative increase of 85%. Monsanto has strategically aligned its priorities to benefit its shareholders through continuous dividend payments and share repurchases. This dividend hike was supported by the company’s disciplined capital allocation and strong, flexible balance sheet position along with a consistent cash flow.
Earlier in Jun 2014, the company announced its plan to repurchase approximately $10 billion of common stocks with an existing authorization of $1.1 billion. The latest authorization includes a $6 billion accelerated share repurchase program which came into effect in Jul 2014.
In Jun this year, the company reported fiscal third-quarter 2014 (ended May 31, 2014) results with earnings per share of $1.62, beating the Zacks Consensus Estimate of $1.55 per share by 4.5%. However, revenues of $4,250.0 million fell short of the Zacks Consensus Estimate of $4,368.0 million. The company intends to streamline its debt structure in the near term. Monsanto is targeting a debt to earnings before interest, taxes, depreciation and amortization (EBITDA) ratio of 1.5 by the end of fiscal 2015.
With a market capitalization of $60.3 billion, Monsanto holds a Zacks Rank #3 (Hold). Some better-ranked stocks in the industry include The Andersons, Inc. (ANDE), Gruma S.A.B. de CV (GMK) and Limoneira Company (LMNR). While The Andersons sports a Zacks Rank #1 (Strong Buy), Gruma and Limoneira Company hold a Zacks Rank #2 (Buy).
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