Reynolds American Inc. (RAI) now will pay 80% of this year's
profit to shareholders through dividends, up from the prior target
of 75%, as companies continue to boost such payouts.
President and Chief Executive Susan Ivey said the move "reflects
the confidence both RAI's management and its board have" in its
business strategies.
A host of corporations have been increasing dividends as they
sit on near-record piles of cash.
Reynolds' profit for the first nine months of 2009 was $804
million, up 7.6% from a year earlier. The company has been
benefiting from higher revenue despite falling cigarette volume.
Its latest quarter's results beat analysts' expectations and the
company raised the low end of its 2010 earnings view.
Reynolds and larger rival Altria Group Inc. (MO) have
diversified into smokeless tobacco for growth as cigarette sales
continue to decline. Reynolds has shifted its focus to a few key
brands and closed cigarette plants to consolidate production.
Reynolds shares closed Friday at $32.35 and were inactive
premarket. The stock is up 22% this year.
-By Kevin Kingsbury, Dow Jones Newswires; 212-416-2354;
kevin.kingsbury@dowjones.com