) hiked its quarterly dividend by 14% to 30 cents per share from
the previous 26.25 cents. The increased dividend will be paid on
December 17, 2012, to shareholders of record on November 15,
In addition, International Paper declared a regular quarterly
dividend of $1.00 per share for the period from October 1, 2012, to
December 31, 2012, on the cumulative $4.00 preferred stock of the
company. This dividend will also be paid on December 17, 2012, to
shareholders of record at the close of business on November 15,
International Paper had hiked its quarterly dividend by 40% to
26.25 cents per share in March last year from the previous 18.75
cents. Earlier, in April 2010 and January 2011, the company had
twice hiked its quarterly dividend, thus raising the quarterly
dividend payout substantially from 2.5 cents to 18.75 cents. This
was a positive development for the shareholders, since the company
had slashed its dividend by 90% to $0.10 in March 2009, in an
effort to preserve cash due to the economic downturn.
International Paper ended the second quarter with cash and cash
equivalents of $1.22 billion compared with $4 billion at 2011 end.
Cash flow from operating activities improved to $1.4 billion during
the quarter compared with $1.2 billion in the prior-year
International Paper has more than doubled its free cash flow
compared with levels during the period 2000-2004. We expect
International Paper to continue utilizing its sound cash flow by
investing in capital projects, indulging in acquisitions, reducing
its total debt and returning a greater proportion of cash to
shareholders through an increased dividend.
Mergers and acquisitions remain International Paper's key
strategy to strengthen its businesses over the long term. The
acquisition of Texas-based Temple-Inland is its largest since it
) corrugated-packaging business for $6 billion in August 2008. The
company generated $60 million in synergies to date.
The transaction is expected to be accretive to EPS within one
year of closing and incrementally beyond 2013. Moreover, the
combination will strengthen the packaging business of North America
by increasing its share in the corrugated packaging market to 34%
from the current level of 27%. Furthermore, through its joint
ventures, International Paper has significant projects underway in
Russia and China, which will help the company sustain its earnings
Memphis, Tennessee-based International Paper is a global paper
and packaging company with operations in North America, Europe,
Latin America, Russia, Asia and North Africa. International Paper
conducts its businesses through five segments: Printing Papers,
Industrial Packaging, Consumer Packaging, Distribution (Xpedx) and
Forest Products. Currently, the stock retains a Zacks #2 Rank,
implying a short-term Buy rating.
INTL PAPER (IP): Free Stock Analysis Report
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