Plum Creek Timber Company Inc.
) announced a 5% hike in its quarterly cash dividend rate, based
on its bullish expectations of persistent growth of long-term,
sustainable cash flow.
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The company will now pay a dividend of 44 cents per share, 2
cents above the prior-quarter dividend of 42 cents per share. The
increased dividend will be paid on May 31, 2013 to stockholders
of record on May 17.
Plum Creek has established a solid operating platform that helps
it generate a decent cash flow. The cash generated by the
company's manufacturing and timber resource businesses escalated
by a combined $44 million in 2012. Given the strong fundamentals
of these business segments as well as the growth prospects, the
company further expects an uptick in cash generated from these
businesses in 2013.
Plum Creek also came up with impressive results in first-quarter
2013. The company's earnings per share reached 35 cents,
comfortably surpassing the Zacks Consensus Estimate of 32 cents
and well ahead of the year-ago quarter earnings of 18 cents. Net
income for the quarter nearly doubled to $56 million from $29
million reported in the prior-year quarter.
The better-than-expected results at this real estate investment
trust (REIT) were driven by increasing demand for wood products
stemming from a recovery in the residential construction market.
The company has registered a decent performance across its
Plum Creek's deal with Drax and
Vulcan Materials Company
) will augur well for its top line. The company is aiming to
increase its non-real estate adjusted EBITDA by $50 million this
year. In this regard, it has already reported growth of $12
million in the first quarter.
Therefore, with solid quarterly results and strong fundamentals,
the company is well poised to maintain its growth curves and
simultaneously benefit the shareholders with steadily rising
As a matter of fact, solid dividend payouts are arguably the
biggest attraction for REIT investors as the U.S. law requires
these companies to distribute 90% of their annual taxable income
in the form of dividends to shareholders.
Plum Creek currently has a Zacks Rank #3 (Hold). However, the
other two stocks which are performing better and deserve a
), both carrying a Zacks Rank #2 (Buy).