Sanderson Farms To Pay Special Dividend, Hikes Regular Rate

Premium meat products company Sanderson Farms, Inc. (NASDAQ:SAFM) recently announced approximately 33.3% or 8 cents per share increase in its quarterly dividend rate. In addition to this regular reward, the company plans to pay a special dividend to its shareholders. We believe that such disbursements reflect the company’s healthy cash position and a strong balance sheet.

The company’s share price gained roughly 0.3% at the close of the trading session on Sep 22.

In the last three months, Sanderson Farms’ shares have yielded 36.5% return, outperforming 4.2% gain of the industry it belongs to.



Discussion on the News

As revealed, the dual rewards have been approved by Sanderson Farms’ board of directors. The revised quarterly dividend rate now stands at 32 cents per share, up from the previous rate of 24 cents. On an annualized basis, the dividend rate is currently $1.28 per share. Special dividend to be paid is $1 per share.

The company will be paying both the quarterly dividend and the special dividend on Oct 17, 2017 to its shareholders on record as of Oct 3.

We believe that Sanderson Farms’ shareholder-friendly capital allocation strategy will keep investors interested in the stock. In the first nine months of fiscal 2017 (ended July 31), the company distributed roughly $10.9 million as dividends. Such disbursements were supported by $310.1 million net cash flow generation from operating activities during the period. Also, exiting the period, the company’s cash and cash equivalents were $398.3 million. The company’s dividend yield is currently at 0.6%.

Zacks Rank and Key Picks

With a $3.7 billion market capitalization, Sanderson Farms currently sports a Zacks Rank #1 (Strong Buy). Solid future prospects have led to positive revision in earnings estimates. Notably, in the last 60 days, the Zacks Consensus Estimate on the stock grew 28.6% to $13.07 per share for fiscal 2017 (ending Oct 2017) and by 28.5% to $10.46 for fiscal 2018.

Sanderson Farms, Inc. Price and Consensus

Some other stocks worth considering in the food industry are Pilgrim's Pride Corporation (NASDAQ:PPC) , Lifeway Foods, Inc. (NASDAQ:LWAY) and Nomad Foods Limited (NYSE:NOMD) . All these stocks sport a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Pilgrim's Pride’s financial performance was impressive in the last quarter, with a positive earnings surprise of 9.41%. Also, earnings estimates for 2017 and 2018 were revised upward over the last 60 days.

Lifeway Foods pulled off a positive earnings surprise of 500% in the last quarter. Also, earnings expectations for 2017 and 2018 improved over the past 60 days.

Nomad Foods’ financial performance was impressive in the last quarter, with a positive earnings surprise of 13.64%. Also, earnings estimates for 2017 and 2018 were revised upward over the last 60 days.

Looking for Stocks with Skyrocketing Upside?

Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.

Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look.

See the pot trades we're targeting>>