In an attempt to enhance shareholder value,
Campbell Soup Company
) recently hiked its quarterly dividend by approximately 7.6% to
31.2 cents per share, thereby bringing the annual dividend to
The new dividend is payable on Oct 28, 2013 to shareholders of
record as of Oct 8, 2013. The annualized dividend yield, based on
the increased dividend and last closing stock price of $41.28, is
over 3.0%. Earlier, on Nov 1, 2010, Campbell Soup raised its
quarterly dividend to 29 cents from 27.5 cents per share.
The company has been consistently paying dividend ever since
it got publicly listed in 1954. The company's strategy of paying
regular dividend and increasing the same at feasible intervals
reflects its commitment to enhance long-term value for
shareholders. Through this, Campbell Soup also depicts its
ability to boost earnings as well as cash flows in the long
During fiscal 2013, Campbell Soup returned approximately $367
million to shareholders in the form of quarterly dividends.
Campbell Soup's strong balance sheet and cash flow provide
financial flexibility in shareholder-friendly moves, product
innovation and the expansion of operations geographically. The
company generated operating cash flow of $1 billion during fiscal
2013, while ended the year with cash and cash equivalents were
Increasing the dividend has been common for companies having a
stable cash position and healthy cash flow. Apart from Campbell
Soup, many other firms have raised their quarterly dividends in
the recent past. These include
) that raised their dividends by 5% to 81 cents,22% to 28 cents
and 20% to 15 cents, respectively.
We believe that dividend payments not only enhance
shareholders' return but raise the market value of the stock as
well. Through dividend payouts, companies bolster investors'
confidence, persuading them to either buy or hold the scrip
instead of selling it. Looking ahead, Campbell Soup remains
confident of its growth potential, raising hopes for further
enhancement of shareholder value through dividend payouts.
However, Campbell Soup has a highly leveraged balance sheet
with long-term debt of $2,544 million at the end of fiscal 2013
and shareholders' equity of $1,210 million. Therefore, Campbell
Soup carries a Zacks Rank #4 (Sell).
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