International Unveils Dividend Hike, Share Buyback

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On Tuesday,International Paper ( IP ) delivered a couple of pieces of good news for investors. The paper giant announced a big increase to its dividend and unveiled a lar ge stock buyback.

International Paper hiked its dividend by 17% to 35 cents a share per quarter. This will be paid Dec. 16 to shareholders of record Nov. 15. Previously it boosted its dividend in October. International Paper's dividend has nearly doubled from the amount it paid in March of 2011.

With the latest raise, the company pays $1.40 a share annually, giving its stock a yield of 2.8%. International Paper has one of the highest yields among the 12 dividend-paying stocks in the Paper & Paper Products group.

International Paper also said it will buy back up to $1.5 billion of its own shares over the next two to three years. The company will repurchase the shares in the open market. Stock buybacks can increase earnings per share, as net income is divided by a smaller number of outstanding shares.

In the past few years, International Paper has had a rocky earnings history. Earnings fell in three of the past five years. This is why it has a three-year Earnings Stability Factor of 28 and a five-year stability of 45. Generally, it's best to see Earnings Stability Factors of 20 or less.

Sales also have seen ups and downs. But the firm has put together a streak of six straight quarters of rising revenues.

Analysts polled by Thomson Reuters see earnings rising 33% this year and 35% in 2014.

International Paper last broke out past a 49.04 buy point from a cup-with-handle base July 25. Big buyers failed to return after that one-day show of strength. The stock is now in a flat base or shallow cup pattern with a 50.43 buy point.



The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Investing Ideas

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