) recently announced a 25% increase in its quarterly dividend to 37.5 cents per share from the prior payout of 30 cents a share.
The increased dividend will be paid on October 26, 2012 to shareholders of record as of October 5, 2012.
Monsanto continues to take steps to increase shareholder value through share repurchases and dividends, thereby making use of excess cash as well. The company also announced that it will repurchase shares worth $1 billion over the next three years.
Earlier, the company offered debt worth $500 million. Management intends to use the cash proceeds for general corporate purposes and to refinance an existing debt of $486 million with maturity due on August 15, 2012.
The company also issued senior unsecured notes worth $500 million in two equal parts. The first lot consists of $250 million aggregate principal amount of 2.2% senior notes maturing July 15, 2022. Yield to maturity on these notes is 2.213% and have been offered at 99.884% to the public. Interest will be paid semi-annually on these beginning January 15, 2013.
The second lot comprises another $250 million aggregate principal amount of 3.6% senior notes, scheduled to mature on July 15, 2042. These notes will yield 3.608% on maturity and have been offered at 99.854%. Interest will be paid semi-annually on these beginning January 15, 2013.
At the end of the third quarter of fiscal 2012, Monsanto had approximately $1,538 million of long-term debt and $1,716 million of cash and cash equivalents.
We maintain a Neutral recommendation on Monsanto in the long run. However, the company holds a Zacks #2 Rank, which translates into a short-term rating of Buy.