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Agricultural machinery and technology provider AGCO is implementing a new capital return strategy that will help the company return cash to investors in different market conditions.
AGCO’s (AGCO) new framework includes regular quarterly dividends, share buybacks, and an annual, variable special dividend that will return excess cash to investors.
Under this strategy, AGCO has increased its quarterly dividend by 25% to $0.20. The payable date for the dividend is June 15 to shareholders of record on May 14.
Furthermore, the company is resuming its share buyback program in 2021 and expects total buybacks of $120 million to $150 million during the year. AGCO has also declared a special dividend of $4, payable on June 1 to shareholders of record on May 10. (See AGCO stock analysis on TipRanks)
AGCO Chairman, President, and Chief Executive Officer Eric Hansotia said, “This new capital return framework balances AGCO’s continued commitment to returning cash to shareholders while limiting shareholder concentration and supporting liquidity in the Company’s common stock.”
On April 22, Oppenheimer analyst Kristen Owen reiterated a Buy rating on the stock with a $166 price target (12.1% upside potential).
Owen estimates AGCO’s new capital allocation policy to return “Approximately $500 million of the $725 million operating cash generation the company guided for 2021.”
Consensus on the Street is that AGCO is a Moderate Buy based on 7 Buys and 5 Holds. The average analyst price target of $156.08 implies upside potential of 5.4%. Shares have climbed steadily over the past year to register a gain of 210.5%.