The board of directors of Archer Daniels Midland Co. on Dec. 16 raised its regular quarterly dividend 26%, to 24c per share from 19c per share. The new dividend will be payable March 13, 2014, to stockholders of record at the close of business on Feb. 20, 2014.
“Our continued strong cash flow generation and our confidence in the future earnings power of our company allow us to significantly increase our quarterly dividend,” said Patricia Woertz, chairman and chief executive officer of ADM. “Historically, we have paid out approximately 20% to 25% of earnings; going forward we will aim for a range of 25% to 30%, thereby allowing shareholders to participate more directly in the earnings stream of the company.”
ADM’s share price opened at $40.44 on Dec. 16 and climbed as high as $41.66 on Dec. 17, the day after the announcement.
The company also announced that it intends to buy back from its shareholders 18 million shares of its stock by the end of 2014 to fully mitigate the dilutive impact of equity units converted in 2011 and compensation and benefit plan issuances in 2013 and 2014. At current prices, this would represent about $725 million. The company said it will consider further distributions to shareholders later in 2014 in the context of its capital allocation strategy.
Ms. Woertz also provided some detail on the company’s 2014 business plans. She noted that from the cash flows to be generated in 2014, it expects to invest about $1.4 billion in capital projects, with the majority of the growth capital invested outside the United States, and will return about $1.4 billion to shareholders in the form of the higher dividends and the repurchase of 18 million shares.
“We will continue to take a balanced approach to capital allocation,” Ms. Woertz said. “Our strong balance sheet and solid cash flow generation will allow for capital investments in growth projects with strong returns and return of capital to our shareholders and still leave us sufficient ability to take advantage of strategic opportunities that may arise in 2014. We are confident and enthusiastic about the opportunities ahead.”
