PC maker Dell Inc. (DELL: Quote) said Tuesday that it plans to pay quarterly cash dividends on its common stock beginning in its fiscal third quarter, as sustainably strong cash flow from operations has enabled the company to revise its capital allocation strategy.
The Round Rock, Texas-based company said it expects the initial dividend rate to be $0.32 per share annually, or $0.08 per share quarterly. Based on Dell's closing stock price of $11.86 on Monday, the dividend yield would be 2.7%.
As of May 4, Dell had $17.2 billion in cash and investments and 1.75 billion shares of common stock outstanding.
Dell said through the dividend and share repurchases, it expects to increase its target range for distribution of capital to shareholders to 20% to 35% of free cash flow from 10% to 30% of free cash flow.
Brian Gladden, Dell's chief financial officer, said, "The payment of a quarterly cash dividend to Dell's shareholders adds another element to our disciplined capital allocation strategy."
The announcement on Dell's dividend policy was in conjunction with the company's 2012 analyst meeting, where CEO Michael Dell and other company executives will reiterate the company's plan to continue shifting its mix of operating income to Dell-owned enterprise solutions and services that scale vertically and horizontally with customer needs to address both its largest and smallest customers.
Dell was among the worst sufferers among the technology giants during the recession In order to drive growth, Dell resorted to acquisitions, cut thousands of jobs, closed plants and entered the smartphone market.
Of late, Dell is acquiring or has signed deals to acquire small companies to expand its business. After losing the takeover battle for data storage firm 3PAR Inc. to larger rival Hewlett-Packard Co. (HPQ), Dell acquired Compellent Technologies, Inc. last year. In August 2011, Dell completed its acquisition of security software maker Force10 Networks.
In 2012, Dell has completed the acquisitions of AppAssure, Clerity Solutions and SonicWALL, Inc. The company has also signed deals to buy Make Technologies, Wyse Technology Inc. and Wyse Technology.
Last month, Dell reported a 33% drop in first quarter profit, hurt by lower revenue and deteriorating margins amid slow consumer demand.
Dell shares, which have traded in a range of $11.80 to $18.36 over the past year, closed Tuesday's regular trading session at $11.97, up 11 cents. The stock is gaining 32 cents or 2.67% in after hours trading.
| || |
| To receive FREE breaking news email alerts for Dell Inc. and others in your portfolio|
by RTT Staff Writer
For comments and feedback: email@example.com