Orchids Paper Products Company
), an integrated manufacturer of tissue paper products, recently
announced a 16.7% year over year hike in its annual dividend
payout to $1.40 per share on an annualized basis. The second
quarter 2013 cash dividend of 35 cents is payable on Jun 21 to
shareholders of record as of Jun 7.
Based on the closing price of $23.01 on May 17, 2013, the
proposed dividend affirms a healthy yield of 6.1%. 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 from
the company have been one of its strong points.
This is the third consecutive quarter in which Orchids has
increased its quarterly dividend by 5 cents each. The company had
earlier raised the quarterly dividend payout from 25 cents to 30
cents per share or from $1.00 to $1.20 on an annualized basis in
Mar 2013. Prior to that, Orchids raised its quarterly dividend in
Nov 2012 from 20 cents to 25 cents per share.
The recent dividend hike follows strong quarterly results, with
Orchids reporting record net sales of $26.6 million in first
quarter 2013. 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 $5.5 million at quarter-end, while cash flow provided by
operating activities in the reported quarter was $4.2 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
Resolute Forest Products Inc.
PH Glatfelter Co.
), each carrying Zacks Rank #1 (Strong Buy). Orchids presently
have a Zacks Rank #4 (Sell).
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ORCHIDS PAPER (TIS): Free Stock Analysis
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