Fastenal Company (NASDAQ:FAST) has announced a substantial 11.4% increase in its quarterly cash dividend, raising it from 35 cents to 39 cents per share compared to the previous year. This national wholesale distributor specializing in industrial and construction supplies is set to distribute the enhanced dividend to shareholders of record as of February 1, with the payout scheduled for February 29, 2024. Following this news, the stock experienced a 0.4% gain in the after-hours trading session on January 17.
Since 1991, Fastenal has consistently rewarded its shareholders with annual dividends, complemented by special one-time dividends in 2023, 2020, 2012, and 2008. In November 2023, the company declared a special one-time dividend of 38 cents per share, distributed in cash on December 20 to shareholders of record as of December 6.
As of January 17, 2024, Fastenal’s dividend payout ratio stands at 70%, and it offers a dividend yield of 2.2%, calculated based on the closing share price of $63.38. This move underscores Fastenal’s commitment to regularly enhance stockholders’ returns and reflects the company’s robust financial position amidst industry-wide challenges.
Fastenal’s consistent practice of sharing its cash flows with shareholders aligns with its sound financial standing. The company closed the third quarter of 2023 with $297.5 million in cash and cash equivalents, a notable increase from $230.1 million at the end of 2022. Leveraging its solid cash flow, Fastenal reduced its debt, with total debt amounting to $260 million or 7% of total capital by the end of the third quarter of 2023, compared to $575 million or 14.9% of total capital in the year-ago period.
The company’s financial strength, coupled with its ability to generate cash flow and access low-cost capital, instills confidence among stakeholders. Fastenal’s commitment to delivering consistent and incremental dividend payments aligns with investor preferences for return-generating stocks, particularly those with a high dividend yield.
Fastenal’s stock has demonstrated strong performance, surging 31.5% in the past year, outpacing the Zacks Building Products – Retail industry’s growth of 10.6%. Earnings estimates for 2024 indicate a 5.8% year-over-year growth, reflecting the company’s effective cost-control measures, strategic investments in Onsite locations, and emphasis on developing its e-commerce business. The positive trend is expected to persist as Fastenal remains proactive in navigating industry challenges and driving sustained growth.
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