Seagate (STX) Didn't 'Cut' Dividend; Seeks More Payment Normalization - RBC

August 8, 2016 2:40 PM EDT
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RBC Capital is out with commentary on Seagate (Nasdaq: STX) amid the company's recent dividend announcement, suggesting to some that the company may have "cut" its payout.

Analyst Amit Daryanani commented, On their recent EPS call STX announced the deceleration of their normal dividend and noted cash payment date would be Oct 5th. In theory, this means STX investors will not get a dividend in Sept-qtr and over 2016 they would receive 3 dividend cash payments (vs. normally 4). While implicitly this appears to be a dividend cut, our discussion with STX points towards their desire to normalize the time period from announcing their dividend to cash payment, which historically has stood around 25 days and will now be ~60 days inline with dividend paying peers. (AAPL is the only company with a sub 25 day delta between deceleration and payment). Net/Net: While in 2016 shareholders will get 3 cash dividend payments (vs. normal 4), in CY17 and beyond we expect STX to announce and payout 4 dividends suggesting this isn’t a long-term dividend cut but more a desire to adjust the timeline from deceleration to payout.

RBC rates Seagate at Sector Perform with a price target of $31.

For an analyst ratings summary and ratings history on Seagate Technology click here. For more ratings news on Seagate Technology click here.

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