Avnet Hikes Dividend & Boosts Share Buyback Authorization
Avnet Inc.’s AVT board of directors recently increased the quarterly dividend rate and expanded the existing share repurchase program, reflecting its sound financial position and favorable prospects.
The company declared a cash dividend of 17 cents per share payable on Sep 18 to shareholders of record as on Sep 8, up 6.25% from 16 cents paid in the previous quarter. This is the second time that Avnet has raised the dividend rate since it restarted paying in Sep 2013.
Additionally, Avnet expanded the existing share repurchase authorization by $250 million. The board initiated a share repurchase program worth $1.25 billion in 2011 and has utilized approximately $762 million since then.
Therefore, with the expansion, Avnet now has a total authorization of $738 million. Notably, since 2011, the Arizona-based global technology distributer has returned nearly $932 million to shareholders through dividend and share buyback.
Additionally, during fiscal 2015, Avnet returned approximately $160 million and $87.3 million through share buyback and quarterly dividends, respectively.
Avnet’s strong balance sheet and cash flow provide it with the financial flexibility to undertake shareholder-friendly initiatives and invest further to expand in newer markets. The company generated operating cash flow of $583.9 million in fiscal 2015 and ended the period with cash, cash equivalents and investments of nearly $932.6 million.
Some other companies with a consistent track record of returning excess cash through share repurchases and dividend are Yahoo! Inc. YHOO, SanDisk Corporation SNDK and Accenture plc ACN.
These initiatives not only enhance shareholders’ return but also raise the market value of the stock as well as investors’ confidence in it, in our view. Looking ahead, Avnet remains confident of its growth potential, thereby raising hopes for further buybacks.
Currently, Avnet carries a Zacks Rank #3 (Hold).
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