Agrium Inc. (NYSE:AGU), an agricultural products and services company, recently caught our eye when the company announced several shareholder friendly initiatives. These included raising its dividend payout ratio to 40-50% of free cash flow from its earlier targeted payout of 25-35%, and plans to repurchase up to 5% (around 7.2 million) of its current outstanding shares over the next 12 months. Both of these actions not only increase shareholder value, but also demonstrate management’s optimism for the company’s future.
Based on the most recent quarterly dividend payment of $0.78, Agrium has an annual dividend payment of $3.12 which translates to a current dividend yield of around 3%. Although the most recent $0.78 dividend payment was just increased from $0.75, that figure represents the payout target of 25-35% and not the newly announced 40-50%. Even assuming the payout ratio moves from the high end of the old (35%) to the low end of the new (40%), investors should be able to expect at minimum an increase of 14% in its quarterly dividend payment. Although that is a solid dividend increase, there is another more powerful dividend growth driver coming in the near future… READ MORE