Universal Forest (UFPI) Hikes Semi-Annual Dividend By 7%

Forest products company Universal Forest Products Inc. (NASDAQ:UFPI) , a day after reporting record results for third-quarter 2016, announced a 7% increase in its semi-annual dividend rate.

As revealed, Universal Forest Products’ board of directors approved a semi-annual dividend of 45 cents per share, higher than the prior rate of 42 cents. On an annualized basis, the dividend has increased to 90 cents from 84 cents per share.

Universal Forest Products will pay the revised dividend on Dec 15, to its shareholders of record as on Dec 1.

Universal Forest Products follows a consistent policy of rewarding its shareholders handsomely, having paid approximately $8.52 million as dividend in the first nine months of 2016. We believe such disbursements reflect the company’s strong cash position. Exiting the third quarter, the company’s cash and cash equivalents were $36.7 million, while cash generated from operating activities in the nine months ended Sep 2016 increased 12.4% year over year to $136.4 million.

Universal Forest Products engineers, manufactures, treats, distributes and installs lumber, composite wood, plastic and other building products. The company continues to make relentless efforts, both organic and inorganic, toward expanding and improving its products as well as services. Also, the company seems well positioned to benefit from the strengthening demand in the U.S. construction market.

However, in the near term, Universal Forest Products remains exposed to risks arising from customer concentration, rising costs and dependence on housing markets. Also, the company faces competition from other players in the industry.

Zacks Rank & Stocks to Consider

With a market capitalization of $1.86 billion, Universal Forest Products carries a Zacks Rank #3 (Hold). Currently, investors interested in the building products industry can consider stocks like Louisiana-Pacific Corp. (NYSE:LPX) , Lowe’s Companies, Inc. (NYSE:LOW) and Weyerhaeuser Co. (NYSE:WY) . While Louisiana-Pacific sports a Zacks Rank #1 (Strong Buy), both Lowe’s Companies and Weyerhaeuser carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Louisiana-Pacific Corp.’s financial performance has been impressive, with an average positive earnings surprise of 53% for the last four quarters. Also, earnings estimates for 2016 and 2017 have been revised upward over the last 60 days.

Lowe’s Companies has strong earnings growth potential, with long-term earnings growth expectation at 15.70%. Weyerhaeuser’s average earnings surprise is a positive 8.66% for the last four quarters.

Confidential from Zacks

Beyond this Analyst Blog, would you like to see Zacks' best recommendations that are not available to the public? Our Executive VP, Steve Reitmeister, knows when key trades are about to be triggered and which of our experts has the hottest hand. Click to see them now>>