SSCC Smurfit-Stone Container Corp. Common Stock

The Board of Directors of Sonoco Products Co. (SON) declared an increase of a penny per share in the quarterly dividend from the previous dividend of 28 cents per share.

The dividend at  the enhanced rate, amounting to 29 cents per share, will be payable on June 10, 2011 to shareholders of record as of May 13, 2011.

According to management, this is the 29th consecutive year when Sonoco has increased dividend on its common stock. This is also the 344th quarter starting from 1925 when the company has paid dividend to shareholders.

According to the company’s guidance, the annual dividend is expected to rise from $1.12 to $1.16 per share, representing an increase of 3.6%.

In addition, management states that its new projected annualized dividend will provide a yield of about 3.2%, which is one of the highest among the U.S. packaging companies.

In addition, the company also announced the completion of a 2 million common stock repurchase program for a total amount of $69.5 million at an average price of $34.75. The program, which commenced on December 6, 2010, concluded on March 25, 2011. Furthermore, the Board of Directors increased its authorization to repurchase up to 5 million shares of common stock from the previous 3 million shares.

Dividend paid by the company during fiscal 2010 amounted to $111.8 million, compared with $107.9 million in 2009. Sonoco used $138 million of cash for acquisitions and repurchased 695,000 shares of common stock for approximately $23 million.

All these activities led to the cash and cash equivalents of $158.2 million as of fiscal 2010 end, down from $185.2 million as of fiscal 2009 end. The company also generated cash flows of $375 million from operating activities in the year, down from $391 million in the prior year.

We currently have a Zacks #3 Rank (short-term 'Hold' recommendation) on the stock.

Hartsville, South Carolina-based Sonoco is a global manufacturer of consumer and industrial packaging products. The company has more than 300 operations in 35 countries throughout North and South America, Europe, Australia and Asia.

It operates through four reportable segments: Tubes and Cores/Paper, Consumer Packaging, Packaging Services and All Other Sonoco segment. Sonoco competes with Bemis Company Inc. (BMS) and Smurfit-Stone Container Corp. (SSCC).

 
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