Ashland Inc. (ASH) said its board doubled its quarterly dividend Wednesday, a result of its confidence about future business and the cash it managed to build having whittled down its heavy debt load.
Many companies have been raising their dividends as the improving economy bolsters there business. During the depths of the recession and financial crisis, dividend cuts were a popular measure for preserving the bottom line at many companies.
The board doubled the payout to 15 cents. Chairman and Chief Executive James J. O'Brien said that over the last year and a half, Ashland has made "excellent progress" integrating its $2.6 billion takeover of Hercules and paying down debt. Ashland has been selling assets in the wake the Hercules acquisition, using proceeds to reduce its heavy debt load. Two ratings agencies in March upgraded Ashland to the brink of investment grade partly because of its stronger credit quality.
O'Brien said the payout boost reflects the company's strong cash position because of those accomplishments and demonstrates the board's confidence about the future.
Last month, the company reported its fiscal second-quarter profit slumped 54% because of debt-issuance charges, but its core results topped analysts' expectations. O'Brien noted significant gains in volume across its businesses.
Ashland shares closed Wednesday down 1.4% at $54.27 and weren't trading after hours. The stock has doubled in value in the last year and hit its highest level in two and half years last month.
-By Joan E. Solsman, Dow Jones Newswires; 212-416-2291; email@example.com