Covanta Holding Corporation
) has increased its dividend and boosted the current share
repurchase authorization. The company focuses on increasing
shareholder value by effectively running the business,
capitalizing on growth investments and returning any excess
capital to its shareholders.
Covanta Holding has increased its quarterly dividend by 10%,
bringing the annualized dividend to 66 cents per share from the
previous payout of 60 cents per share. Following the hike, the
company will now pay a quarterly dividend of 16.50 cents as
against the 15 cents paid earlier. The said dividend will be paid
on Apr 5, 2013, to shareholders of record as of the close of
business on Mar 28, 2013. Meanwhile, the company has increased
the current share repurchase authorization to $150 million.
The last dividend hike was made in Mar 2012, which raised the
payout by 100%, bringing the quarterly dividend to 15 cents per
share. Also, the company had approved an additional $100 million
of share repurchases to its share repurchase authorization.
The company returns surplus capital to stockholders through
dividends and share repurchases. Since July 2010, Covanta has
returned over $750 million to shareholders in the form of cash
dividends and share repurchases. In 2012, the company repurchased
5.3 million shares of common stock at a weighted average cost of
$16.55 per share for an aggregate amount of approximately $88
million. As of Dec 31, 2012, the amount remaining under its
authorized share repurchase program was $87 million.
COVANTA HOLDING (CVA): Free Stock Analysis
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In order to achieve its objective of maximizing long-term
stockholder return, Covanta is growing its existing businesses
and adding new projects through development and acquisition. In
Dec 2012, the company had acquired Delaware Valley Resource
Recovery Facility from GE Energy Financial Services ("GE EFS"), a
General Electric Company
), for $94 million in cash.
In Dec 2012, waste management services firm
Waste Management, Inc.
) had increased its quarterly dividend from 35.5 cents per share
to 36.5 cents per share.
Covanta is one of the world's largest owners and operators of
infrastructure for the conversion of waste to energy (known as
"energy-from-waste" or "EfW"), as well as other waste disposal
and renewable energy production businesses. The company conducts
all of its operations through subsidiaries which are engaged
predominantly in the businesses of waste and energy services.
Last month, Covanta Holding posted fourth-quarter 2012 earnings
of 20 cents per share that missed the Zacks Consensus Estimate of
23 cents and the year-ago earnings of 26 cents. The decline was
due to a higher effective tax rate, increased interest expense
and the negative impact of Hurricane Sandy. These declines were
partially offset by a lower number of shares outstanding due to
the company's common stock buyback program.
Currently, stiff competition, an overall tepid macroeconomic
outlook, and the adverse impact of Hurricane Sandy are matters of
concern. The company presently retains a short-term Zacks Rank #4
(Sell). In the near term, we would advise investors to accumulate
its short-term Zacks #2 Rank (Buy rating) peer
FuelCell Energy Inc.