Optimistic Fluor Raises Quarterly Dividend by 25% : Economy: The Irvine giant, citing a 35% jump in earnings, strong cash flow and ‘favorable outlook,’ will give stockholders a bigger return per share.
In a statement of confidence about its business prospects, Fluor Corp. said Tuesday that it will increase its quarterly dividend to stockholders to 8 cents per share, a 25% increase.
The announcement came one day after the Irvine-based engineering and construction company reported a 35% jump in earnings for its year ended Oct. 31. The company said it was raising its dividend because of its higher earnings, strong cash flow and a “favorable outlook” for its business.
The increase in Fluor’s dividend is unusual at a time when many U.S. companies are growing cautious about a slowing economy. Fluor has acknowledged that its domestic sales are sluggish but said its overseas business is growing.
Kathryn A. Maag, an analyst at the Chicago investment firm Duff & Phelps Inc., said she was not surprised by Fluor’s announcement. She noted that an 8-cent-a-share cash dividend payment would total only $6 million a quarter, an insubstantial amount for a company with annual revenue of more than $7 billion.
“I think they’re trying to communicate their confidence that they can sustain a given level of cash flow,” Maag said. “Even if there is a severe recession, the dividend level is low enough where it should not be a problem for the company.”
For its fiscal year ended Oct. 31, Fluor reported earnings of $146.9 million, up from $108.5 million. Revenue rose 18.6% to $7.45 billion from $6.28 billion in 1989.
The company has been benefiting from a revival of the international petrochemical production and processing business that was once its mainstay.
“We have in excess of $400 million in cash,” said Deborah Land, a company spokeswoman. “We base our dividend on Fluor’s performance, and Fluor’s performance has been very strong. So it made sense to raise (the dividend).”
Fluor stock closed Tuesday at $37.75, off $1.125 per share in New York Stock Exchange trading.
The dividends are payable on Jan. 16, 1991, to shareholders of record at the close of business on Dec. 26, 1990.