Staples Hikes Dividend - Analyst Blog

Staples Inc. (SPLS), the global leader for the supply of office products, recently boosted its quarterly dividend by 9%. The Board has approved an increase in annual dividend to 36 cents (or 9 cents quarterly) from 33 cents a share (or 8.25 cents quarterly).

Framingham, Massachusetts-based, Staples, said that the higher dividend will be paid on April 15, 2010, to shareholders of record as on March 26, 2010. Staples’ strong liquidity provides financial flexibility to drive future growth and reward shareholders.

Staples had ended fiscal year 2009 with cash and cash equivalents of $1,415.8 million and generated free cash flow of $1.8 billion during the year. The company had returned $237 million in cash dividends to shareholders in 2009.

The company had recently reported its fourth-quarter 2009 quarterly earnings, which had risen 5.6% year-on-year to 38 cents. Staples also had forecasted first-quarter 2010 earnings in the range of 25 cents to 27 cents and fiscal year 2010 earnings between $1.23 and $1.33 per share.

The current Zacks Consensus Estimate for first-quarter 2010 is 26 cents and for fiscal year 2010 is $1.33 per share.

The office products retailer, Staples, which expects a modest recovery in 2010, had forecasted total sales to rise in the mid-single digit in the first quarter and to ascend low-single digit in fiscal year 2010.

During fourth-quarter 2009, Staples saw a rise in sales of basic items such as ink, toner and computers, but experienced sluggish demand for business machines, furniture and other durables.

The deterioration in the business environment and waning consumer spending with the tightening of credit markets in the aftermath of the global meltdown have resulted in sluggish demand for big-ticket items. Staples faces stiff competition from other office supply chains such as, Office Depot, Inc. (ODP) and OfficeMax Inc. (OMX).