By G C Mays
As the company previously discussed, Scotts Miracle-Gro declared a special dividend of $2.00 per share. In addition to the special dividend, the company increased its quarterly dividend to $0.45 per share. In an unanticipated move, the company also announced a new share buyback program of $500 million. The originally planned distribution to shareholders totaled $125 million so investors may find this a welcome surprise. CEO Jim Hagedorn said,
Our recent actions should be viewed as a sign of confidence in the continued success of our business and the positive outlook shared by the Board and leadership team. Whether by returning cash to shareholders, achieving a more efficient capital structure or investing in growth opportunities, we remain focused on driving shareholder value."
The special dividend and dividend increase confirm my opinion written about in, "Mass Retailers Like Wal-Mart Put A Damper On Earnings At Scotts Miracle-Gro", that the company is conceding that limited long-term growth prospects exist for the firm and those prospects are likely to stay that way for the foreseeable future. While the share buyback would be accretive to earnings per share over time if executed, this action in my opinion is trying to make the idea of no-growth more palatable to shareholders.
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