With the continuous efforts to reward its shareholders with regular dividends, Louisiana-Pacific Corporation LPX — commonly known as LP Building Solutions (LP) — hiked its quarterly cash dividend to 24 cents per share. The move underscores the company’s sound financial position and its commitment to boost shareholders’ value.
Louisiana-Pacific raised its quarterly dividend by 9% from the previous figure of 22 cents per share. The amount will be paid out on Mar 31, 2023, to shareholders of record as of Mar 10.
What’s Driving Dividend Hikes?
Louisiana-Pacific has been consistently enhancing shareholders’ returns through share repurchases and dividends. In the first nine months of 2022, it paid $53 million in dividends and $900 million to repurchase shares. In 2021, the company paid $66 million in dividends and $1.3 billion to repurchase 21.1 million shares.
After paying for dividends and share repurchases, the company ended third-quarter 2022 with $1 billion of liquidity, including $469 million in cash. Notably, its cash and cash equivalents increased from $358 million reported at 2021-end. The company had committed to returning at least 50% of cash flow to its shareholders from operations in excess of capital expenditures in order to sustain its core business and grow Siding and value-added OSB over time.
Investors always prefer an income-generating stock. Hence, a high-dividend-yielding one is obviously much coveted. It goes without saying that stockholders are always on the lookout for companies with a track record of consistent and incremental dividend payments to bet on.
Shares of the company have gained 0.25% in the after-hours trading session on Feb 17 and 13.4% in the past six months, against the Zacks Building Products – Wood industry’s 3.3% decline. The trend is likely to continue, given its focus on the Siding business, cost containment efforts and enhancing shareholders’ value.
Image Source: Zacks Investment Research
LP has been increasing the penetration of Siding products in repair/remodel and rolling out SmartSide products. It exited the fiber product line to focus on higher-margin SmartSide strand products. The company also launched ExpertFinish within the Prefinish product line.
LP is gradually transforming a commodity producer into a more stable cash-generative business by increasing revenues and the EBITDA mix. LP continues focusing on three areas, such as increasing the efficiency of mills by improving productivity, run time and quality through overall equipment effectiveness or OEE initiatives; applying best practices to its supply chain and optimizing infrastructure costs.
In a bid to reduce costs, LP lowered the cost structure of its facilities through Lean Six Sigma efforts, the sale or shutdown of underperforming mills and manufacturing facilities as well as investments in technology. Louisiana-Pacific resorts to a strategy of curtailing production at selected facilities to meet customer demand and optimize its portfolio as well as margins.
Zacks Rank & Stocks to Consider
LP currently carries a Zacks Rank #5 (Strong Sell). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
United Rentals, Inc. URI — currently sports a Zacks Rank #1. The long-term earnings growth rate of the company is 16.3%.
The Zacks Consensus Estimate for URI’s 2023 sales and EPS suggests growth of 20.3% and 28.3%, respectively, from the year-ago period’s reported figures.
Skyline Champion Corporation SKY — currently flaunts a Zacks Rank #1. SKY has a trailing four-quarter earnings surprise of 43.2%, on average.
The Zacks Consensus Estimate for SKY’s fiscal 2024 sales and EPS suggests declines of 11.7% and 37.9%, respectively, from the fiscal 2023 reported levels.
Sterling Infrastructure, Inc. STRL — carrying a Zacks Rank #2 (Buy) — provides transportation, e-infrastructure and building solutions.
STRL’s expected earnings growth rate for 2023 is 9.9%.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report