DowDupont’s dividend and share repurchase plan
On November 2, 2017, DowDuPont (DWDP) declared a dividend of $0.38 per share for the fourth quarter. The dividend will be payable on December 15, 2017, with a record date of November 15, 2017. This is the first dividend declared by the newly merged company. Shareholders who held stock prior to the merger will be receiving their fifth dividend and an increase of 21% on a year-over-year basis. Shareholders who held DuPont before the merger will see a dividend increase of 28% YOY.
Also, the DWDP board approved a $4 billion share repurchase program. At the end of 3Q17, DWDP had ~2.4 billion outstanding shares. The new share repurchase program could be an indication of aggressive share repurchases in the near future, which would boost the earnings per share and will add value to the remaining shareholders.
Andrew Liveris, executive chair of DowDuPont, said, “Rewarding our owners over both the near- and long-term has been a top priority for both legacy companies, and it remains so for DowDuPont. The Board considered many factors in making these decisions, following an approach that delivers benefits to both heritage Dow and DuPont shareholders.”
DWDP’s stock performance
DWDP stock fell 1.9% and closed at $71.16 for the week ended November 3, 2017. The decline in the stock price has resulted in the stock trading below the 20-day moving average price of $71.64. Post-merger, the stock has returned 5.9%. Analysts are expecting the stock price to be at $79.65 over the next 12 months. DWDP’s 14-day RSI of 51 indicates that the stock is neither overbought nor oversold.
Investors looking for indirect exposure to DWDP can invest in the Materials Select Sector SPDR Fund (XLB), which invests 23% of its portfolio in DWDP. The fund also provides exposure to Monsanto (MON), Praxair (PX), and Air Products and Chemicals (APD), which have weights of 7.1%, 5.1%, and 4.8%, respectively, as of November 3, 2017.