) is increasing its capital deployment to enhance shareholders'
value. The company announced a 25% rise in its quarterly cash
dividend to 75 cents per share from 62.5 cents. This implies an
annual dividend yield of 1.92% based on the closing share price of
$155.96 as of Jul 8, 2014. The new dividend will be paid on Sep 2,
2014 to shareholders of record as of Aug 22, 2014.
Concurrently, the board of Cummins approved a new $1 billion
share repurchase program, which will begin following the closure of
its current $1 billion repurchase program.
The enhanced capital deployment reflects Cummins' strong balance
sheet as well as its confidence in long-term business prospects.
The company repurchased 3 million shares in the first quarter of
2014 and has committed to return 50% of its full-year operating
cash flow to shareholders through dividends and share repurchases.
In the first three months of 2014, Cummins generated $263 million
in net operating cash flow.
Moreover, the company's cash and cash equivalents increased to
$2.2 billion as of Mar 31, 2014 from $2.7 billion at the end of
2013. The strong cash balance allows Cummins to increase its
dividend payment and share buyback expenses without affecting daily
Cummins currently has a Zacks Rank #2 (Buy). Some other
automobile stocks worth considering include
China Automotive Systems Inc.
). Meritor and China Automotive sport a Zacks Rank #1 (Strong Buy),
while Autoliv carries a Zacks Rank #2.
Want the latest recommendations from Zacks Investment Research?
Today, you can download 7 Best Stocks for the Next 30 Days.
Click to get this free report
CUMMINS INC (CMI): Free Stock Analysis Report
AUTOLIV INC (ALV): Free Stock Analysis Report
MERITOR INC (MTOR): Free Stock Analysis Report
CHINA AUTO SYS (CAAS): Free Stock Analysis
To read this article on Zacks.com click here.