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Tractor Supply's Dividend Hike, Share Buyback to Boost Value

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Tractor Supply Company (TSCO - Free Report) is focused on boosting investor sentiment through several growth initiatives and shareholder-friendly moves. To further enhance shareholder value, the company announced a 12.9% hike in its quarterly cash dividend to 35 cents per share compared with the prior rate of 31 cents. This marks the company’s ninth straight year of dividend increase. The new dividend is payable Jun 11, 2019 to shareholders on record as of May 28, 2019.

The company increased the authorization for its share buyback program by $1.5 billion. This brings the total authorizations to date to $4.5 billion. As of Mar 31, 2019, Tractor Supply has repurchased nearly 62.8 million shares for about $2.6 billion since 2007, which marks the inception of its share repurchase plan.

Tractor Supply has always followed a disciplined capital allocation strategy that focuses on making investments to develop business, while returning cash to shareholder through dividend payouts and share buybacks. The company’s strong balance sheet and free cash flow has helped it to execute balanced capital allocation strategy which includes reinvesting in business, increasing dividend and executing share buybacks.

We appreciate Tractor Supply’s efforts to enhance long-term shareholder value. Markedly, dividend hikes not only boost shareholder returns but also raise the market value of a stock. Through this strategy, companies try to win investors and persuade them to either buy or hold the scrip instead of selling it.

Apart from dividend hikes, the company is focusing on growth initiatives, which include expansion of store base and incorporation of technological advancements to induce traffic and drive the top line. It has been improving marketing and merchandising initiatives as well as its supply chain efficiencies to boost profitability.

Moreover, this Zacks Rank #2 (Buy) company remains focused on integrating the physical and digital operations to offer consumers a seamless shopping experience through its "ONETractor" initiative.

Apparently, the company is reaping significant benefits from its Buy Online Pick Up in Store program. This is quite evident from robust double-digit e-commerce sales growth for 27 straight quarters, reported in first-quarter 2019. Moreover, it remains well on track to expand its stockyard in-store kiosk and enhance its mobile POS technologies, which are likely to generate incremental sales.



In the past one year, shares of this Brentwood, TN-based company have gained 47.2%, outperforming the industry’s growth of 25.7%.

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