Orchids Paper Products Company
), an integrated manufacturer of tissue paper products, recently
announced a 20% year-over-year hike in its dividend payout to a
quarterly payment of 30 cents per share or $1.20 on an annualized
basis. The first quarter 2013 dividend is payable on Mar 29 to
shareholders of record as of Mar 19.
Based on the closing price of $23.77 on Mar 8, 2013, the proposed
dividend affirms a healthy yield of 5.05%. A steady dividend
payout is part of the long-term strategy of Orchids to provide
attractive risk-adjusted returns to its stockholders. In
addition, decent dividend increases at periodic intervals have
been one of the company's most attractive features.
The company had earlier raised the quarterly dividend payout from
20 cents to 25 cents per share or from 80 cents to $1.00 on an
annualized basis in fourth quarter 2012. Prior to that, Orchids
raised its quarterly dividend in fourth quarter 2011 from 10
cents to 20 cents per share.
The recent dividend hike follows strong quarterly and annual
results, with Orchids reporting record net sales of $100.8
million for full year 2012. The superior performance was
attributable to increased market penetration in the mid- and
premium-tier segments, with a diligent focus on new product
developments and emphasis on delivering the best-in-class
customer service. Orchids also has a healthy liquidity position
with a cash balance of $5.7 million at year-end 2012, while free
cash flow for the year was $1.4 million.
Orchids manufactures bulk tissue paper (known as parent rolls)
and converts parent rolls into finished products, such as paper
towels, bathroom tissue and paper napkins. The company primarily
sells its products to value retailers and discount retail stores
due to their high overall market growth, consistent order
patterns and low number of stock keeping units.
Despite its niche market, Orchids faces stiff competition from
other players in the industry such as
Clearwater Paper Corporation
International Paper Company
), each carrying Zacks Rank #2 (Buy). On the other hand, both
Orchids and one of its peers
Fibria Celulose SA
) presently have a Zacks Rank #3 (Hold).
CLEARWATER PAPR (CLW): Free Stock Analysis
FIBRIA CELULOSE (FBR): Free Stock Analysis
INTL PAPER (IP): Free Stock Analysis Report
ORCHIDS PAPER (TIS): Free Stock Analysis
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