Recently, Waddell & Reed Financial Inc. (WDR) announced major capital deployment activities to boost shareholder value. The company is soon going to reward its shareholders with an increased regular quarterly dividend and a special cash dividend.
Waddell & Reed’s Board of Directors has approved an increase in the quarterly dividend to 28 cents per share. The dividend is payable on February 1, 2013 to stockholders of record as of January 11, 2013. The new dividend represents a hike of 12% over the previous one.
Additionally, the Board has approved a special cash dividend on its Class A common stock of $1.00 per share, payable on December 6, 2012 to stockholders of record as of November 26, 2012.
However, Waddell & Reed has declared no changes pertaining to its share repurchase program. The company will continue with its existing buyback plans. For the nine months ended September 30, 2012, it had bought back approximately 1,158,720 shares.
Similar Action by Other Financial Institutions
Earlier this week, City National Corp. (CYN) declared a regular quarterly dividend of 25 cents per share along with a special common stock cash dividend of 25 cents per share. The consolidated dividend is payable on December 18, 2012 to shareholders of record on December 3, 2012.
Earlier this month, Commerce Bancshares, Inc. (CBSH) declared several actions to enhance shareholders’ value. Apart from the regular quarterly cash dividend of 23 cents per share, the company declared special cash dividend of $1.50 per share. Both these dividends will be paid on December 17 to the shareholders of record as of November 30.
Commerce Bancshares also declared a 5% stock dividend payable on December 17 to the shareholders of record as of November 30. Earlier in July, the company had announced the buyback of additional shares, thereby bringing the total authorization to 3,000,000 shares. During the third quarter of 2012, the company repurchased 98,000 shares at an average price of $39.66 per share.
Waddell & Reed’s robust liquidity position and ample free cash flows have facilitated its highly impressive capital deployment activities. Even after paying out dividends and opting for buybacks, the company has sufficient capital to use for organic expansion as well as acquisitions. This reflects its strong performance profile amidst a tough economic backdrop.
Waddell & Reed currently retains a Zacks #2 Rank, which translates into a short-term Buy rating. We expect such meaningful capital deployment activities to result in upward estimate revisions for the stock, thereby helping it achieve a better Zacks Rank. However, considering the company’s fundamentals, we maintain a long-term Neutral recommendation on the shares.