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Domtar Declares a Dividend of $0.42 Per Share

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Aug. 10 2016, Updated 9:07 a.m. ET

Price movement

Domtar (UFS) fell by 0.38% to close at $39.22 per share during the first week of August 2016. The stock’s weekly, monthly, and year-to-date (or YTD) price movements were -0.38%, 14.9%, and 8.6%, respectively, as of August 5.

UFS is trading 8.0% above its 20-day moving average, 7.8% above its 50-day moving average, and 7.4% above its 200-day moving average.

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Related ETFs and peers

The Vanguard High Dividend Yield ETF (VYM) invests 0.03% of its holdings in Domtar. The ETF tracks the FTSE High Dividend Yield Index. The index selects high-dividend-paying US companies, excluding REITS, and weights them by market cap. The YTD price movement of VYM was 11.2% on August 5.

The iShares MSCI KLD 400 Social ETF (DSI) invests 0.03% of its holdings in Domtar. The ETF tracks a market cap–weighted index of 400 companies deemed to have positive environmental, social, and governance characteristics by the Metals Service Center Institute.

The market caps of Domtar’s competitors are as follows:

  • International Paper Company (IP) — $19.1 billion
  • WestRock Company (WRK) — $11.2 billion

Domtar declared dividend

Domtar has declared a quarterly dividend of $0.42 per share on its common stock. The dividend will be paid on October 17, 2016, to shareholders of record on October 3, 2016.

Performance of Domtar in 2Q16

Domtar reported 2Q16 consolidated sales of $1.27 billion, a fall of 3.3% from its consolidated sales of $1.31 billion in 2Q15. Sales in its Pulp and Paper segment fell by 5.0%, and sales in its Personal Care segment rose by 5.6% between 2Q15 and 2Q16.

The company’s cost of sales excluding depreciation and amortization and operating income fell by 0.44% and 37.1%, respectively, between 2Q15 and 2Q16. It reported closure and restructuring costs of $21.0 million in 2Q16, compared to $1.0 million in 2Q15. Its net income and EPS (earnings per share) fell to $18.0 million and $0.29, respectively, in 2Q16, compared to $38.0 million and $0.60, respectively, in 2Q15.

UFS’s cash and cash equivalents and inventories fell by 11.9% and 1.7%, respectively, between 4Q15 and 2Q16. Its current ratio rose to 1.99x, and its debt-to-equity ratio fell to 1.12x in 2Q16, compared to 1.97x and 1.13x, respectively, in 4Q15.

In the next part of this series, we’ll discuss how Energizer Holdings (ENR) performed in its fiscal 3Q16.

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