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Seagate Technology (STX) Investors Nervous as Company Extends Dividend Payment Cycle

August 2, 2016 6:08 PM EDT
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Price: $93.05 -1.62%

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Dividend investors in Seagate Technology (NASDAQ: STX) got a little nervous today after the company maintained the $0.63/share quarterly dividend, but said it would be paid on October 5, or nearly ~4.5 months after its previous dividend was paid on May 24. Susquehanna analyst Mehdi Hosseini believes the timing on the dividend was a key reason the stock sold off 5.5% Tuesday despite strong results and guidance.

The company confirmed to StreetInsider that they did in fact make a change to the timing of the dividend, but explains its because their dividend payment cycle was at the low end of the market. They said after this payment it will be on a regular schedule.

From the company:

"For FY17 Seagate looked at its dividend payment cycle and found that our 25 day cycle was only second to Apple in terms of timing. Given the obvious difference in our cash cycles, we chose to move the payment to a 63 day cycle for FY17. This keeps Seagate in the top quartile of payment cycles and will be perpetual. Of course this has a one time change to cash outlay for September quarter but then is on a regular schedule after that."



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