Cal-Maine Foods, Inc. (CALM.OB), the largest poultry-egg producer in the United States, announced that the company will commence its new variable rate dividend policy for the third quarter of 2008.
With record high egg prices, the company is pleased with the results from the third quarter of fiscal 2007. Demand for eggs remains elevated in both the retail and food service segments. In addition, demand for egg shells, used to produce liquid, frozen and dried egg products, has also been strong. Even with the higher prices, eggs still represent a good value to the consumer compared with other foods. However, feed costs continued to be high and the company is conservatively expecting production for the year to be similar to 2007 levels.
The new variable rate dividend policy will pay an amount equal to one third of the company’s quarterly income. For this past quarter, the dividend totals approximately $0.807 per share to holders of its common stock. The dividend this quarter represents a 2.8% yield on the stock, which is priced at $28.50 per share. Utilizing a conservative approach, and assuming the levels of production revert back to 2007’s totals, the dividend yield might be quite attractive to investors. Adding this quarter’s net income with the three quarters of 2007’s net income totals $99.3 million. The calculation equals a dividend of $1.395 per share or a 4.895% dividend yield, a rate much higher than many blue chip stocks.
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