Investing

Boise Cascade Again Surprises Investors With 25% Quarterly Dividend Increase and $1 Special Dividend

On Thursday afternoon post market close, wood product manufacturer Boise Cascade (US:BCC) announced to investors that they would be increasing their quarterly dividend by 25% (3 cents) to 15 cents per share.

In addition to the quarterly dividend increase, BCC’s Board also announced a one-off special dividend of $1.00 per share.

For the year ahead, BCC will have a ~2.5% annual dividend yield when including the firm’s special dividend.

Special dividends are not new for Boise Cascade as the company pays out excess profits once a year in the form of an annual special dividend. This special dividend last year was $2 per share as surplus capital after requirements were greater.

Boise Cascade has been featured near the top of the Fintel US Dividend Screener And Leaderboard for quite some time and for good reason.

The company has paid consistent dividends to investors for the last 5+ years and has continued to raise quarterly payments over this time.

The special dividends peaked during the pandemic and are now cooling as management is anticipating financing costs to rise in addition to general inflationary pressures across the board.

On the dividend leaderboard, BCC is ranked the 4th out of 6,946 companies with a score of 96.73. Boise Cascade has grown dividends at a rate of 15.61% per anum according to the Fintel platform.

A chart has been provided to the right that shows the trailing dividend per share over time against the share price.

BCC also screens highly on Fintel’s quality and value screens with scores of 91.45 and 96.11 respectively. The quality score is based on a company’s cash generating efficiency while the value score is based on relative valuation vs peer companies.

BCC is currently trading on an undemanding PE ratio of 3.32x which is well below the S&P 500 average.

Last week Boise also announced that they had purchased 4.67 acres of land adjacent to its existing Albuquerque, New Mexico branch which will be used to expand operations.

BCC’s Albuquerque branch manager Arik Zonski stated “The expansion will increase our diversification of customer segments in those areas as well as our ability to expand current product offerings in engineered wood products (EWP), Trex composite decking, and various other commodities” 

The company last updated investors when they reported second quarter results. The company outperformed the street with EPS coming in at $5.49 compared to forecasts of around $4.70 per share.

The group generated revenue of ~$2.28 billion which was marginally ahead of forecasts.

While the company has outperformed market expectations, BCC experienced a rating downgrade from Bank of America to “underperform” from “neutral” with a target price reduction from $72 to $70.

The firm noted that continued housing risks were the main driver of the downgrade as they expect housing starts to decline to low single-digit growth in 2023.

BCC has a consensus ‘hold’ rating across the market with an average target price of ~$70.

Other stocks that have featured at the top of the Fintel leaderboard with their stocks include:

This article originally appeared on Fintel

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