EmailDell (DELL $12.32 +0.35) announced that its Board of Directors has adopted a dividend policy under which the company intends to pay quarterly cash dividends on its common stock beginning in the third quarter of the current fiscal year. Dell expects the initial dividend rate to be $0.32 per share per year, or $0.08 per share quarterly.
"Our efforts to streamline our operations and shift the mix of our business over the past several years have resulted in sustainably strong cash flow from operations, enabling us to increase the percentage of capital we've allocated to research and development, capital expenditures and acquisitions while maintaining an ongoing share repurchase program, the payment of a quarterly cash dividend to Dell's shareholders adds another element to our disciplined capital allocation strategy." The company expects that through the dividend and share repurchases, it will increase its target range for distribution of capital to shareholders from 10-30 percent of free cash flow to 20-35 percent. Gladden said that Dell is confident in its continuing ability to make the necessary investments to grow its portfolio of enterprise solutions and services while initiating the quarterly dividend and continuing share repurchases. Co projects its enterprise solutions, software and services business will grow at a 10 percent compounded annual growth rate through fiscal year 2016 and represent an increasing percentage of Dell's operating income margin. Gladden said that while Dell has become a solutions and services company, it remains committed to a profitable end-user computing business. "By exercising discipline and being selective on the business we pursue, we expect to continue to run a profitable end-user business, we've gained share in the high-value portion of the industry for six of the last seven quarters and see this part of our business continuing to contribute operating income in excess of 5% of revenue."
