Shares of Lindsay Corporation (LNN) rose as much as 1% and closed at $83.41 after its Board approved a 4% increase in regular quarterly dividend on Jul 25. The new dividend will be paid on Aug 29, 2014, to shareholders of record on Aug 15, 2014.
Lindsay Corporation will now pay 27 cents per share to shareholders, which is a penny higher than the prior dividend of 26 cents. Annualized, this represents a payout of $1.08 per share, up 3.8% from the current annual dividend of $1.04 per share. It equates to a dividend yield of roughly 1.3%.
In Jan 2014, Lindsay Corporation announced its capital allocation plan, which lays out the company’s intent to make investments in order to attain revenue and earnings growth, along with enhancing returns to shareholders. Lindsay Corporation intends to repurchase shares worth $100 million to $150 million over the next 24 months and increase its dividend annually.
In line with these moves, Lindsay Corporation had announced a 100% increase in annual dividend from 52 cents per share to the current $1.04 per share. The company has also targeted a cash balance of $60 million to $75 million for 2014 and prioritization for cash use is investment in organic growth including capital expenditures, mainly for increasing capacity.
Lindsay Corporation’s earnings have suffered a decline in the first two quarters of fiscal 2014 due to significantly lower agricultural commodity prices, which affected domestic irrigation revenues. Third-quarter fiscal 2014 (ended May 31, 2014) earnings also declined 36% year over year to $1.28 per share due to lower crop prices and the elimination of enhanced Section 179 tax depreciation benefit.
Lindsay Corporation generated $65.9 million in cash from operating activities for the period of nine months ended May 31, 2014 compared with $40.9 million for the period of nine months ended May 31, 2013. The company has no debt at present.
The company will continue to invest in growth and productivity, both organically and through acquisitions. Lindsay Corporation remains optimistic about growth in global applications of technologies.
However, lower crop prices are likely to pressure irrigation demand during the rest of the year. Moreover, lower commodity prices and lack of visibility into the primary selling season for irrigation equipment remain concerns.
Omaha, NE-based Lindsay Corp. is a leading designer and manufacturer of self-propelled center pivot and lateral move irrigation systems, which are primarily used for agriculture purposes to increase or stabilize crop production while saving water, energy and labor at the same time.
Lindsay carries a Zacks Rank #4 (Sell). Some better-ranked stocks worth considering in the sector include Kubota Corporation (KUBTY), Progressive Waste Solutions Ltd. (BIN) and Blount International Inc. (BLT). All these stocks have a Zacks Rank #1 (Strong Buy).