Packaging Corp. Lifts Payout For Second Time In 2013


Some companies may take years before giving shareholders a higher dividend. But that's not the case withPackaging Corp. of America ( PKG ), or PCA.

Last week, the company hiked its dividend for the second time this year. Citing its operational and financial prowess, as well as its commitment to deliver shareholder value, PCA lifted its annual dividend by 28% to $1.60 a share. It will dole out a quarterly installment of 40 cents a share July 15 to shareholders of record June 14.

In January, PCA boosted its dividend by 25%.

At the new rate, PCA offers a yield of about 3.2% vs. around 2.4% for the S&P 500. PCA has the second highest yield among the 13 dividend-paying stocks in the Paper & Paper Products group. Only thinly tradedOrchids Paper Products ( TIS ) has a higher yield.

Based in Lake Forest, Ill., PCA makes containerboard, corrugated containers, retail packing products and packing supplies. The company has had a rocky track record of earnings in recent years. In 2008 and 2009, profits fell 16% and 30%, respectively. Its bottom line jumped 72% in 2010, but earnings dipped in 2011 by a penny per share. Last year, profit climbed 28%.

PCA has a five-year Earnings Stability Factor of 26, which isn't the most stable but still decent. It has now posted five straight quarters of profit growth. Analysts polled by Thomson Reuters see earnings jumping 43% to $2.95 a share this year.

PCA shares are trading near all-time highs, but they are extended. The stock has tested its 10-week line multiple times since breaking out from a flat base in December. Generally it's OK to buy on the first or second bounce off the 10-week moving average.

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: Personal Finance , Investing Ideas

Referenced Stocks: PKG , TIS

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