Investors will soon learn whether Polaris Industries (NYSE: PII) will break its 21-year record of raising its dividend payment. Last year, it only hiked its payout by 4%, and after the year the power-sports vehicle manufacturer has had, where recalls of its vehicles for "thermal hazards" stretched across almost its entire product line, it would be understandable if it fails to do so this year.
Returning value to shareholders
Polaris had also pursued a policy of steeper stock buybacks, spending almost $246 million in 2016 to buyback and retire shares. It still has an outstanding 7.5 million shares under its current authorization giving it plenty of flexibility to continuing reducing its share count, though it does say it will also use repurchases to offset equity issuance for management.
The power-sports vehicle maker is also expecting operating cash flow to be down significantly in 2017 because of lingering recall and legal issues, but its capital structure is expected to remain largely unchanged. It saw long-term debt surge last year to $1.1 billion due to the acquisition of Transamerican, and it doesn't anticipate taking on any more now.
Polaris Industries has a lot of moving parts to consider, but even after this prolonged bout of product recalls, it's not in any financial distress. Although any dividend hike might not be the double-digit rates investors enjoyed over the past few years, they can probably expect to hear very soon whether the company will indeed raise its payout again in 2017.
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