Magna International Dividend Increase and Stock Split

Magna International

Magna International Inc (MG.TO)(MGA) announced a dividend raise from a quarterly amount of US$0.38 to US$0.44, an increase of 16%. The new dividend is scheduled to be paid Mar 27, 2015 for shareholders on record on Mar 13, 2014. In addition, Magna announced that the stock will be split two-for-one. The stock split will occur before the new dividend payment (so, dividend payment amount will be US$0.22 post split), on Mar 25, 2015 to shareholders on record at the close of business on Mar 11, 2015.

From the earnings release statement:

THREE MONTHS ENDED DECEMBER 31, 2014

  • We posted sales of $9.40 billion for the fourth quarter ended December 31, 2014, an increase of 2% over the fourth quarter of 2013. We achieved this sales increase in a period when vehicle production increased 5% in North America and 3% in Europe, both relative to the fourth quarter of 2013.
  • Complete vehicle assembly sales decreased 9% to $721 million for the fourth quarter of 2014 compared to $788 million for the fourth quarter of 2013, while complete vehicle assembly volumes decreased 10% to approximately 33,000 units.
  • For the fourth quarter of 2014, adjusted EBIT increased 17% to $712 million compared to $607 million for the fourth quarter of 2013.
  • For the fourth quarter of 2014, income from operations before income taxes was $677 million, net income attributable to Magna International Inc. was $509 million and diluted earnings per share were $2.44, increases of $163 million, $51 million and $0.41, respectively, each compared to the fourth quarter of 2013.
  • Excluding other expense, net after tax and net loss attributable to non-controlling interests, and excluding certain tax items recorded in the fourth quarter of 2013, income from operations before income taxes, net income attributable to Magna International Inc. and diluted earnings per share increased $97 million, $57 million and $0.44, respectively, in the fourth quarter of 2014 compared to the fourth quarter of 2013.
  • For the fourth quarter ended December 31, 2014, we generated cash from operations of $881 million before changes in operating assets and liabilities, and $118 million in operating assets and liabilities. Total investment activities for the fourth quarter of 2014 were $716 million, including $670 million in fixed asset additions, $23 million in investments and other assets and $23 million to purchase subsidiaries.

STOCK SPLIT BY DIVIDEND AND DUE BILL TRADING

Our Board of Directors has approved a two-for-one stock split of the Company’s outstanding Common Shares. The two-for-one stock split will be implemented by way of a stock dividend. Subject to regulatory approval, shareholders will receive one additional Common Share of the Company for each Common Share held. The stock dividend will be payable on March 25, 2015, to shareholders of record at the close of business on March 11, 2015.

The Company’s Common Shares will commence trading on a “due bill” basis, at the opening of business on Monday, March 9, 2015until Wednesday, March 25, 2015, inclusively. Accordingly, ex-dividend (post-split) trading in the Common Shares will commence on the Toronto Stock Exchange (“TSX”) at the opening of business on Thursday, March 26, 2015.

The TSX has been advised that trading in the Common Shares on the New York Stock Exchange (“NYSE”) from March 9, 2015until March 25, 2015, inclusively, will also be on a “due bill” basis and that ex-distribution (post-split) trading in the Common Shares will commence on the NYSE on March 26, 2015.

The Company is ascribing no monetary value to the stock dividend. All equity-based compensation plans or arrangements and our normal course issuer bid will be adjusted to reflect the stock split. Shareholders should retain their existing share certificates and not return their share certificates to the Company or its transfer agent.

INCREASED QUARTERLY CASH DIVIDEND

Our Board of Directors also declared a quarterly dividend with respect to our outstanding Common Shares for the quarter endedDecember 31, 2014. The Board increased the dividend by 16% to $0.44 per share ($0.22 per share after giving effect to the two-for-one stock split referred to above).  This dividend is payable on March 27, 2015 to shareholders of record on March 13, 2015.

Vince Galifi, Magna’s Chief Financial Officer, commented:  “Our quarterly dividend of $0.44, an increase of 16%, represents a record dividend rate for Magna.  Our ongoing actions to utilize our balance sheet to both grow our business and return capital to shareholders reflect not only our significant cash flow generation but the confidence our Board has in Magna’s future.

Earnings call transcript is available hereMy portfolio consists of 25 shares of Magna International, which increases my annual dividends from $38 to $44, an increase of $6.

6 thoughts on “Magna International Dividend Increase and Stock Split

    • Hey DGJ,
      Magna unfortunately does not get as much love outside Canada, unless you follow the automotive sector closely. Its an absolute gem and has a very bright future ahead of itself, even though the company lowered its 2015 guidance. The long term outlook is fantastic.

      Thanks for stopping by and the wishes
      R2R

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