Capital allocation priorities
Tyson Foods’ (TSN) capital allocation priorities focus on increasing long-term shareholder value. The company’s plans include deploying operating cash flow to invest in its consumer-preferred portfolio. Tyson Foods aims for organic growth through capital expansion projects and operational efficiency. It also plans to acquire businesses that support strategic objectives and return cash to shareholders through dividends and share repurchases.
Recent dividends declared
On May 5, Tyson Foods announced quarterly dividends of $0.15 per share on its Class A common stock and $0.14 per share on its Class B common stock. These dividends will be paid on September 15, 2016, to shareholders of record at the close of business on September 1.
Tyson Foods utilized the strong cash flows generated during fiscal 2Q16 to repurchase 6.9 million shares for $400 million. So far in fiscal 3Q16, the company has purchased ~3 million shares for $200 million.
On February 10, the company declared quarterly dividends of $0.15 per share on Class A common stock and $0.135 per share on Class B common stock. These will be paid on June 15 to shareholders of record at the close of business on June 1.
For the six months ending fiscal 2016, Tyson Foods has returned more than $108 million to shareholders through dividends. Currently, the company has a dividend yield of 0.73%. The company’s management has been raising the dividend on a consistent basis for the last five years. It increased by an average annual rate of 20%. The company paid $0.45 per share in dividends to shareholders in 2015.
Tyson Foods’ peers in the industry include Cal-Maine Foods (CALM), Flowers Foods (FLO), and Pilgrim’s Pride (PPC). CALM, FLO, and PPC have reported year-to-date returns of 5.5%, -9.7%, and 31.3%, respectively, as of May 11. The PowerShares Dynamic Food & Beverage Portfolio (PBJ) invests 2.5% of its holdings in CALM.
In the next article in this series, we’ll look at Tyson Foods’ stock reaction to fiscal 2Q16 earnings.