New York based International Flavors & Fragrances Inc.’s (IFF) board of directors approved an 8.0% hike in the company’s quarterly dividend rate. The revised quarterly rate now stands at 27 cents per common share compared with 25 cents previously, resulting in an annual rate of $1.08 per common share. The revised dividend will be paid on Oct 6, to shareholders as of the close of business on Sep 22.
International Flavors & Fragrances follows a consistent policy of returning cash to shareholders via dividend payments and share repurchases with more than $1.2 billion returned via these sources over the last five years. The recent enhancement is the company’s fifth dividend increase in six years.
During the first quarter of 2010, the company paid roughly $19.8 million in dividends. Cash and cash equivalents at the end of the quarter were $89.8 million and net cash from operating activities was around $32.4 million.
International Flavors & Fragrances together with its subsidiaries, engages in the creation and manufacturing of fragrance and flavor products in the United States and internationally. It operates in two segments: Flavors and Fragrances.
International Flavors’ success is driven by its huge geographical presence and product mix. The company’s accomplishments in research and intense consumer insight support its growth momentum. Besides, enhanced margin levels are expected in the coming year as the company follows a strategy to reduce operating costs.
However, the cyclical nature of the flavors and fragrances industry acts as a hindrance to the company’s growth. Moreover, the intense competition within the industry reduces both top-line and bottom-line results. Prime competitors of the company include Danisco A/S, Firmenich SA, and Givaudan SA.
We currently maintain a Neutral recommendation on the stock, which is in line with the Zacks #3 Rank (Hold).
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