Cliffs Increases Dividend by 123% - Analyst Blog


Cliffs Natural Resources Inc. ( CLF ) announced a new strategic capital allocation plan in order to increase the shareholder value. The company boosted its quarterly dividend by 123% to 62.5 cents from 28 cents previously. The new dividend, which increases the company's payout ratio to more than 20% of 2011 earnings, will be paid on June 1, 2012 to stockholders of record as of April 29, 2012.

The company's motive to implement the strategic plan is to ensure the optimum utilization of cash generated by it. The company's focus remains on providing maximum return to the shareholders by way of dividend distribution and at the same time ensuring that it maintains its organic growth pipeline.

Last month, Cliffs posted net earnings of $185 million or $1.30 per share in the fourth quarter of 2011 compared with last year's $384 million or $2.82 per share. Earnings missed the Zacks Consensus Estimate of $1.54 per share. For full-year 2011, net earnings came in at $1.6 billion, or $11.48 per share compared with $1 billion, or $7.49 per share, in 2010. Earnings surpassed the Zacks Consensus Estimate of $11.46 per share.

Quarterly revenues came in at $1.7 billion, up 17% year over year. The increase was driven by higher sales volumes and increased market pricing. For fiscal 2011, revenues increased by about 45% to $6.8 billion.

Looking ahead, Cliffs anticipates Selling, General and Administrative e    xpenses to be about $325 million in 2012 driven by an increase in growth-related corporate projects. The company expects to incur cash outflows of approximately $165 million to support future growth, comprising approximately $90 million related to exploration and drilling programs and approximately $75 million related to its chromite project in Ontario, Canada.

For 2012, Cliffs anticipates a full-year effective tax rate of approximately 25%. In addition, the company expects depreciation, depletion and amortization for the year to be approximately $620 million and generate cash flow from operations of approximately $1.9 billion.

Cliffs reiterated its previously disclosed capital expenditures budget of approximately $1 billion for 2012, including approximately $300 million in sustaining capital and $700 million in growth and productivity-improvement capital.

Cliffs retains a Zacks #4 Rank, which translates into a short-term (1 to 3 months) Sell" rating. The company faces stiff competition from CONSOL Energy Inc. ( CNX ) and Peabody Energy Corp. ( BTU ).

PEABODY ENERGY ( BTU ): Free Stock Analysis Report
CLIFFS NATURAL ( CLF ): Free Stock Analysis Report

CONSOL ENERGY ( CNX ): Free Stock Analysis Report
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ, Inc.

This article appears in: Investing , Business , Stocks

Referenced Stocks: BTU , CLF , CNX

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