West Pharmaceutical Services
) recently increased its quarterly cash dividend by 1 cent per
share to 19 cents per share, beginning in the fourth quarter of
2012. The increased dividend will be paid on November 7, 2012, to
stockholders of record as of October 24, 2012.
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The announcement marks the nineteenth successive annual increase in
West Pharmaceutical's quarterly dividend. The company's commitment
to returning wealth to its shareholders reflects the strength of
its cash generation capabilities.
West Pharmaceutical is characterized by a capital structure which
generates adequate liquidity to fund research and development
expenditure and pay dividends. Innovation at West Pharmaceutical is
backed by high research and development, with associated
expenditure seen as imperative for maintenance of competitive
advantage. The increase in dividend should boost investor
confidence and drive share value.
West Pharmaceutical, which has ascended in price as of late,
currently has a dividend yield of 1.4% and a payout ratio of 26.3%.
Based on these metrics and the revision of 2012 earnings guidance
to a range of $2.60 to $2.70, up from $2.50 to $2.67, the company
is adequately placed to generate lucrative returns to shareholders.
West Pharmaceutical, which competes with
) in certain niches, currently has a short-term Zacks #2 Rank (Buy
rating). The company, a global leader in the provision of drug
administration systems and components for packaging as well as
delivery of injectable drugs and delivery system components across
various industries, has a significant competitive advantage in the
market it serves.
Additionally, it continues to make headway into new geographies to
expand its business. The company opened two new plants in China and
India in an effort to meet the dynamic and burgeoning market
demand, especially in the Asia-Pacific region. However,
macroeconomic pressure across the globe remains a headwind.