Shares of leading packaging and paper manufacturer International Paper Company IP inched up marginally as it increased the quarterly dividend by 10% year over year to 44 cents per share. The fourth-quarter 2015 dividend is payable on Dec 15 to shareholders of record at the close of business on Nov 16.
Based on the closing price of $42.11 on Oct 14, 2015, the proposed dividend offers a yield of 4.2%. A steady dividend payout is part of the long-term strategy of International Paper to provide attractive risk-adjusted returns to its stockholders. In addition, decent dividend increases at periodic intervals have been one of the company’s most attractive features.
The current dividend increase further reflects the inherent strength of International Paper’s business and due diligence of management to generate long-term profitability and sustainable free cash flow.
Historically, International Paper has consistently returned significant cash to its shareholders through dividends and share repurchases. As of Jun 30, 2015, International Paper has repurchased 36.2 million shares at an average price of $47.37 each, for approximately $1.7 billion.
Headquartered in Memphis, TN, International Paper has manufacturing operations in North America, Europe, Latin America, Russia, Asia, and North Africa. The company employs approximately 58,000 people and is strategically located in more than 24 countries serving customers worldwide.
Moving ahead, the company plans to focus on debt reduction opportunities for improving its balance sheet and reducing effective cost of debt. International Paper’s best-in-industry talent pool and expertise are expected to offer optimal and affordable solutions, thus rendering an edge over its peers. International Paper expects to meet its capital expenditures, service existing debt and meet working capital and dividend requirements during 2015 through current cash balances, cash from operations, and existing credit facilities.
International Paper presently has a Zacks Rank #3 (Hold). Other players in the industry worth mentioning include Fibria Celulose S.A. FBR, Orchids Paper Products Company TIS and Resolute Forest Products Inc. RFP, each carrying a Zacks Rank #2 (Buy).
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