Whirlpool Corporation WHR, known for its shareholder-friendly moves, came forward to reward shareholders once again with a 20% hike in its quarterly dividend rate to 90 cents per share from 75 cents. The increased dividend will be paid on Jun 15, 2015, to stockholders of record as of May 15, 2015.
Following the announcement, shares of this Zacks Rank #3 (Hold) company rose 2.8% to close at $194.85.
Previously, on Apr 14, 2014, Whirlpool had raised its dividend to 75 cents from 62.5 cents per share, indicating an increase of 20%.
With the latest hike, Whirlpool has now increased its dividend from 22.5 cents to 90 cents since 1983. The dividend yield based on the new payout and the last closing market price is approximately 1.9%.
Apart from highlighting its commitment toward creating shareholder value, we believe the company’s regular dividend payments and increments, along with regular share buybacks, reflect its potential to enhance earnings and cash flow generation capabilities.
The company’s management believes that Whirlpool’s strong financial status and business growth potential pave the way for its growth and value creation over the next four years.
Whirlpool's strong balance sheet and cash flows provide financial flexibility to the company for taking shareholder-friendly initiatives, R&D investments and global business expansions. In 2014, the company shelled out $224 million in cash dividends and $25 million toward share buyback.
Whirlpool’s cash and cash equivalents stood at $1,029 million as of Dec 31, 2014. Further it generated $1,479 million of cash from operations and $854 million in free cash flow. Moreover, in 2015, the company expects to generate free cash flow in the range of $700–$800 million. We remain encouraged by Whirlpool's strong cash position and its ability to service long-term debts.
Other companies which recently increased their dividend include Costco Wholesale Corp. COST by 12.7% to 40 cents, Foot Locker Inc. FL, by 14% to $1.00, and Newell Rubbermaid Inc. NWL by 12% to 76 cents.
We believe that dividend hikes not only enhance shareholder returns, but raise the market value of the stock as well. Through dividend raises, companies persuade investors to either buy or hold the scrip instead of selling them. Looking ahead, Whirlpool remains confident of its growth potential, suggesting enhanced value for shareholders via dividend payouts.
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