On the back of a fourth quarter and fiscal 2016 that saw healthy rises in profit, solvents maker WD-40 (NASDAQ: WDFC) is lifting its quarterly shareholder payout significantly. The company has declared that its upcoming dividend will be $0.49 per share, 17% higher than its predecessor.
WD-40 is a habitual dividend raiser. It has increased its distribution once per year since the beginning of this decade. Lately, those hikes have been substantial — last year’s clocked in at 11%, while the 2014 boost was 12%.
The company has been doing well lately. Its fourth quarter saw it take in just over $97 million in net sales, a 6% improvement over the same period last year. Net income saw a much higher rise, by 21% to slightly more than $14 million, which handily beat analyst estimates. WD-40 also recorded growth in both metrics for the full year.
Those improvements have increased the size of the company’s cash pile. Fiscal 2016 free cash flow amounted to more than $56 million, a pleasant 14% higher than the 2015 tally. That was sufficient to fund both the company’s dividend payments and its share repurchases for the year. The latter initiative was renewed at the same level ($75 million) as its previous program, so it’s quite likely the company’s buyback activity will remain steady. The bigger cash pile, meanwhile, leaves room for a fattened dividend. Considering that, we can expect the company to at least maintain its freshly raised payout for now.
The new WD-40 dividend, which will be dispensed on Jan. 31 to stockholders of record as of Jan. 20, would yield 1.8% on the current share price. This is slightly lower than the 2% average of dividend-paying stocks on the S&P 500.
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Eric Volkman has no position in any stocks mentioned.
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