FedEx (NYSE:FDX) stock is rallying after the company raised its dividend by more than 50%. After coming under pressure from an activist investor, the deliverer also announced that it will incentivize its management to reduce the ratio of the company’s capital expenditures to its revenue. Furthermore, it noted that it would name three new individuals to its board.
A Higher Dividend for the Owners of FedEx Stock
FedEx will hike its quarterly payout to $1.15 per share, versus 75 cents previously. The increase will bring the stock’s forward dividend yield to roughly 2%, up from 1.45%. The first payout of the higher dividend will occur on July 11. Investors who own FDX stock as of June 27 will be eligible for the payout.
The company’s board wanted “to ensure that our capital allocation strategy reflects our confidence in the trajectory of the business and increases returns for our stockholders,” explained FedEx CFO Michael Lenz.
The payout increase comes after activist investor D.E. Shaw pushed the delivery company to do more to reward its shareholders.
FDX Stock Rallies on Dividend News, New Board Members
FedEx decided to lower the capital expenditure-revenue ratio target, which is incorporated into the long-term incentive program of its executives. The company did not provide any further information about that change.
Moreover, FedEx appointed two new independent board members — Amy Lane and Jim Vena. Lane and Vena will join the panel immediately. A third, undisclosed independent board member will join in the future. FedEx indicated that D.E. Shaw approved all three new board members.
“Lane was a Managing Director and Group Leader of the Global Retailing Investment Banking Group at Merrill Lynch & Co., Inc., from 1997 until her retirement in 2002,” FedEx stated. Meanwhile, Vena “has over 40 years of railroad experience, most recently serving as Chief Operating Officer of Union Pacific Corporation … from January 2019 to December 2020, and then as a Senior Advisor to the Chairman at Union Pacific,” FedEx reported.
On the date of publication, Larry Ramer did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
