) has approved an additional share repurchase, thereby
maintaining the trend of returning value to its shareholders from
time to time, depending on market conditions.
Under the latest program, the company's board has authorized
the repurchase of up to $500.0 million of its common stock. The
authorization is expected to be completed through 2013.
The share buyback helps the company reduce outstanding share
count, thereby increasing earnings per share and return on
equity. Apart from bolstering shareholder value, this strategic
move will also lift the relatively undervalued share price.
Under the company's existing share repurchase authorization of
$500.0 million, Lorillard spent approximately $304 million for
the repurchase of 7.8 million shares during the fourth quarter of
2012, reported on Feb 13.
Last month, Lorillard's board declared a quarterly dividend
hike of 6.5% on its shares and paid a dividend of 55 cents on Mar
11, 2013 to stockholders of record as of Mar 1, 2013. The company
paid its last dividend of 52 cents in Dec, 2012. Apart from this,
in Nov, 2012, the company's board approved a three-for-one split
of Lorillard common stock, which was distributed in the form of a
200% stock dividend. The additional shares were distributed on
Jan 15, 2013.
In fact, Lorillard is one of the most efficient and aggressive
companies in the tobacco industry that regularly increases
shareholders' return in the form of dividend and share repurchase
activities. The company has rewarded its shareholders and has
increased dividend payment every year. Over the long term,
Lorillard expects to return approximately 70-75% of its earnings
to shareholders in the form of dividends. Regular dividend
payments and share buybacks reflect the company's confidence in
Overall, we are encouraged by the company's dominant share in
the market with rising popularity of its premium brand Newport
and value brand Maverick. Moreover, it is adapting to changing
consumer demands by investing in less-hazardous alternatives for
tobacco with the acquisition of blu eCigs and developing
electronic cigarettes. Currently, Lorillard has a Zacks Rank #2
Other stocks in the consumer staples sector worth a look are
Green Mountain Coffee Roasters Inc
Altria Group Inc
). While Green Mountain carries a Zacks Rank #1 (Strong Buy),
Kellogg and Altria hold a Zacks Rank #2 (Buy).
GREEN MTN COFFE (GMCR): Free Stock Analysis
KELLOGG CO (K): Free Stock Analysis Report
LORILLARD CO (LO): Free Stock Analysis Report
ALTRIA GROUP (MO): Free Stock Analysis Report
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