Packaging Corp. of America on Tuesday said it plans to raise its quarterly dividend a third and bolstered its share repurchase program by $100 million.
The popularity of dividends and share buybacks have increase as companies seek to appeal to investors and tap cash piles they needn’t conserve as much in an improving economy.
Packaging Corp. said it will increase its quarterly dividend to 20 cents a share from 15 cents, costing roughly $5 million each quarter. The paper packaging company board also increased its repurchase authorization by $100 million, with the buybacks expected to come in the next year and a half.
Chief Executive Mark W. Kowlzan said the moves show the company’s commitment to returning value to holders and also “the overall operating and financial strength of the company.”
Last month, Packaging Corp. reported fourth-quarter profit fell moderately after a tax credit benefited the prior-year period and sales were lower than expected even though corrugated-product shipments hit a record high and container board sales were strong. It also gave a weak outlook for the current quarter as it planned to shut down two mills for maintenance.
The company operates four paper mills and 67 corrugated-product plants in 26 states. Demand weakened in the economic downturn, but volumes have since returned to prerecession levels.
