Weyerhaeuser Declares Interim Dividend & New $1B Share Buyback Program

Shares of Weyerhaeuser Company (WY) jumped 3.3% after the company announced an interim supplemental dividend of $0.50 per share and a new share buyback program of up to $1 billion of its common shares. Shares closed at $36.41 on September 22.

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Weyerhaeuser manufactures, distributes, and sells forest products and is the world’s largest private owner of timberlands. Shares have gained 35.6% over the past year. (See Weyerhaeuser stock charts on TipRanks)

The interim cash dividend is payable on October 19 to holders of record as of October 5 and is consistent with the company’s commitment to enhance shareholder returns. The Board has accelerated a portion of its first-quarter 2022 supplemental dividend and approved the interim supplemental dividend of $0.50 per share on account of the company’s solid first-half 2021 cash flows.

Additionally, the newly authorized share buyback program of up to $1 billion of the company’s common shares replaces the existing $500 million share buyback program authorized by the Board in February 2019.

Commenting on the announcement, Devin W. Stockfish, President and CEO of the company, said, “This enables our shareholders to benefit from extraordinary market conditions in the first calendar year of our new dividend framework and also permits us to take advantage of a one-time tax planning opportunity.”

Stockfish added, “Moving forward, we expect to pay the entirety of our supplemental dividend on an annual basis in the first quarter, consistent with our dividend framework. We are excited to accelerate this return of cash, and we look forward to paying a meaningful supplemental dividend in the first quarter of 2022.”

Notably, Weyerhaeuser introduced a “base plus variable supplemental” dividend framework in Q4FY20, under which the company expects to pay an additional variable cash dividend, over and above its quarterly cash dividend, to achieve a targeted total return to shareholders of between 75% – 80% of annual Adjusted Funds Available for Distribution (Adjusted FAD). Such supplemental cash dividends would normally be declared and paid annually in the first quarter of each year.

Recently, Citigroup analyst Anthony Pettinari maintained a Buy rating on the stock with a price target of $45, implying 23.6% upside potential to current levels.

Pettinari has placed WY on a “Catalyst Watch” and listed potential value-creating catalysts for the company. These catalysts include selling land, repurchasing shares, providing investors greater visibility into timberland quality, accelerating cash returns, and exploring the sale or spin-off of Wood Products.

Overall, the stock commands a Strong Buy consensus rating based on 5 Buys and 1 Hold. The average Weyerhaeuser price target of $42 implies 15.4% upside potential to current levels.

Additionally, Weyerhaeuser scores a 9 of 10 on TipRanks’ Smart Score rating system, indicating that the stock has strong potential to outperform market expectations.