In this article, we discuss 5 companies that just increased their dividends by over 10%. If you want our detailed analysis of these stocks as well as the first five picks on the list, go directly to These 10 Companies Just Increased Their Dividends By Over 10%.
5. eBay Inc. (NASDAQ:EBAY)
Number of Hedge Fund Holders: 53
Percentage of Dividend Increase: 22.2%
eBay Inc. (NASDAQ:EBAY) is a California-based multinational e-commerce corporation that enables C2C and B2B sales transactions via its website. The company expanded its share repurchase authorization by an additional $4 billion on February 23 and declared a $0.22 per share quarterly dividend, a 22.2% increase from its prior dividend of $0.18. The dividend will be paid on March 18 to shareholders of record on March 10.
Publishing its fourth quarter results on February 23, eBay (NASDAQ:EBAY) posted earnings per share of $1.05, exceeding estimates by $0.06. The company’s $2.61 billion in revenue also outperformed the market consensus by $6.31 million.
Benchmark analyst Daniel Kurnos lowered his price target on eBay Inc. (NASDAQ:EBAY) to $75 from $85 on February 25 and kept a ‘Buy’ rating on the shares. The analyst observed that eBay (NASDAQ:EBAY) “finished the year on a high note” by exceeding consensus on all metrics in the holiday quarter, but shares traded lower after management discussed a slower recovery/exit growth trajectory. eBay (NASDAQ:EBAY) also signaled impending investment, which may not be ideal in this market. 2022 is now projected to be a down operating margin year, but there is still good value in shares at current levels, the analyst told investors.
A total of 53 hedge funds were bullish on eBay (NASDAQ:EBAY) at the end of Q4 2021, up from 49 funds in the preceding quarter. Nicolai Tangen’s Ako Capital owned the biggest stake in eBay (NASDAQ:EBAY), consisting of 4.9 million shares worth approximately $328 million.
Here is what Steel City Capital had to say about eBay Inc. (NASDAQ:EBAY) in its Q4 2020 investor letter:
“eBay (Long): EBAY continues to be a core holding in the Partnership’s long book despite not having any “sexy” attributes or unknown catalysts. I like EBAY because it checks the boxes of being both capital light and priced as a value stock (low multiple of free cash flow), factors which are attractive in a potentially inflationary environment.
In 3Q’20 the company printed $2.6 billion of revenue vs. guidance of $2.4 billion (a $200 million beat) while full year revenue guidance was taken up by $400 million, implying 4Q’20 would be higher by $200 million as well. Free cash flow from continuing ops was guided to $2.3 billion for the full year, slightly above the $2.0 billion the business regularly generated before getting a Covid/stimulus related boost.
EBAY will have about $4.6 billion of cash on hand at year end5 and should receive another $2.0 billion in after-tax proceeds this quarter related to the sale of its Classifieds portfolio6 . Additionally, the company will receive 540 million shares from Adevinta which are currently valued at ~$8.3 billion, and also holds a warrant to purchase a 5.0% stake in payment processor Adyen which was last valued at ~$775 million. Additional asset sales are also not out of the question7 . Backing everything out at today’s market cap of $38.2 billion gives a clean market cap for the core marketplace of $22.6 billion. At a minimum, I expect $2.0 billion of free cash flow in FY’21, with the potential for a higher figure to the extent the incoming administration is successful in cutting additional stimulus checks. By FY’22, free cash flow should ramp to $2.3 billion after incorporating a full year’s contribution from the managed payments initiative. This values EBAY at 9.6x free cash flow, or 11.7x excluding stock-based comp.”
