AGCO Corp (AGCO) will raise its quarterly dividend by 25 percent to 20 cents per share in 2021. Also the tractor maker will pay a special dividend of $4.00 per share. This is the first dividend hike announced by the company since 2019, when the dividend was hiked by 6.7 percent to $0.16 per share. This new dividend hike will mark the 8th year of annual dividend increases.
AGCO announced its new capital allocation strategy including the dividend hike and special dividend announcements. The new capital return strategy will include AGCO’s regular quarterly dividend payments, share repurchases and an annual variable special dividend to return excess cash.
The next regular quarterly dividend of 20 cents will be paid on June 15, 2021 to all stockholders of record as of the close of business on May 14, 2021. A new annualized dividend rate of 80 cents per share yields 0.5% at a stock price of $153.
The special dividend of $4.00 per share will be paid by AGCO to shareholders of record on May 10, 2021 with a payment date of June 1, 2021. The ex-date for the special dividend is May 7, 2021. The special dividend yields 2.6% at the current stock price mentioned above.
AGCO states that dditional cash available for shareholder distribution will be deployed in the form of a variable special dividend, with the amount based upon cash flow generated in the Company’s prior fiscal year and the Company’s expected future earnings, capital requirements, acquisition opportunities and financial conditions. The first of AGCO’s variable special dividend payments was declared on April 22, 2021 in the amount of $4.00 per share, payable on June 1, 2021 to shareholders of record at the close of business on May 10, 2021. Any future annual variable special dividends made by the Company are expected to be declared and paid in the first quarter of each year. Special dividends, as well as regular dividends and share repurchases, may be suspended, discontinued or modified at any time, for any reason and without notice.
“This new capital return framework balances AGCO’s continued commitment to returning cash to shareholders while limiting shareholder concentration and supporting liquidity in the Company’s common stock,” said Eric Hansotia, AGCO’s Chairman, President and Chief Executive Officer.
AGCO Corporation is a manufacturer and distributor of agricultural equipment and solutions. AGCO products are sold through five core brands, Challenger, Fendt, GSI, Massey Ferguson and Valtra, supported by Fuse smart farming solutions. The company sells a range of agricultural equipment, including tractors, combines, self-propelled sprayers, hay tools, forage equipment, seeding and tillage equipment, implements, and grain storage and protein production systems. AGCO's segments are North America, South America, Europe/Middle East, and Asia/Pacific/Africa. The company was founded in 1990 and is headquartered in Duluth, Georgia, USA. AGCO has paid a dividend every year since 2013.