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Weyerhaeuser Co. (NYSE:WY) moved a step forward in its plan to convert to a real estate investment trust (“REIT”) by rewarding shareholders through a one-time dividend payment. Weyerhaeuser’s board of directors declared the special dividend amounting to $5.6 billion payable on September 1.

The special dividend is inclusive of the regular quarterly dividend payment of approximately $11 million, payable to shareholders of record as of July 22, 2010. The shareholders are given options for stock or cash selection, with total cash payments capped at 10%, or $560 million. Pro-rata distribution will be made in case cash elections exceed the total approved amount.

Weyerhaeuser’s quarterly dividend rate is $0.05 per share. At the end of the first quarter of 2010, the company paid roughly $11 million in dividends. Cash and cash equivalents at the end of the quarter were $2.1 billion and net cash from operating activities was roughly $190 million.

Weyerhaeuser is one of the leading U.S. forest product companies, primarily engaged in growing and harvesting timber; manufacture, distribution, and sale of forest products; and real estate development and construction. The company’s conversion into a REIT will lower its tax liabilities and increase competitiveness in managing its timber portfolio. These along with effective cost-control initiatives, a solid balance sheet, and robust guidance will lead to higher growth in the quarters ahead.

Weyerhaeuser faces stiff competition from Canfor Corporation, International Paper Co. (NYSE:IP), and Louisiana-Pacific Corp. (NYSE:LPX). Also, the industry’s sensitiveness to macroeconomic conditions remains a cause of concern. We are currently maintaining a Neutral recommendation on Weyerhaeuser, which is supported by Zacks # 3(Hold) Rank.

Source: Weyerhaeuser Declares Special Dividend