CDW Authorizes $750 Million Share Repurchase Program Increase and Declares Quarterly Cash Dividend of $0.62 Per Share
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Insights
The authorization of a $750 million increase in CDW Corporation's share repurchase program, coupled with the declaration of a quarterly cash dividend, is a significant financial move that signals the company's confidence in its financial health and commitment to returning value to shareholders. The increase in the dividend by 5 percent compared to the previous year is a positive indicator of the company's profitability and its ability to generate excess cash flow.
From a financial perspective, share repurchases can be seen as a method to optimize the capital structure and potentially enhance earnings per share (EPS) by reducing the number of shares outstanding. This action can lead to a higher stock price, benefiting shareholders. However, it is important to evaluate whether these repurchases are being made at a price that is accretive to value, which is not always the case. Furthermore, the decision to allocate capital to share repurchases rather than reinvesting in the business or pursuing other strategic opportunities should be scrutinized in the context of the company's long-term growth prospects.
CDW Corporation's strategic focus on dividend growth and share repurchases is reflective of its position in the information technology solutions industry. Given the sector's competitive nature, CDW's approach to capital allocation might be aimed at maintaining investor confidence, especially in a market where mature companies are expected to provide consistent returns. The company's track record of returning more than $6.3 billion to stockholders through dividends and share repurchases since its IPO is indicative of its shareholder-friendly policies.
However, investors should consider the opportunity cost of these financial strategies. While share repurchases and increasing dividends can be attractive in the short term, they may come at the expense of potential long-term investments in innovation or expansion. In an industry driven by technological advancement, it is crucial for companies to balance immediate shareholder returns with sustained investment in R&D and strategic growth initiatives.
The announcement from CDW Corporation must be contextualized within the broader economic environment. In periods of economic uncertainty or market volatility, a robust share repurchase program can provide a stabilizing effect on the company's stock price. Additionally, regular and increasing dividends may signal to the market that the company is confident in its continued cash flow generation, which can be reassuring to investors.
It is also important to consider the macroeconomic implications of such financial decisions. For instance, in a low-interest-rate environment, companies often find it cheaper to finance share repurchases through debt. However, if interest rates are on the rise, the cost of borrowing increases, which could affect the sustainability of such programs. CDW's financial strategy, including its focus on managing net leverage, suggests an awareness of these macroeconomic factors and the need to maintain financial flexibility.
Reinforces Ongoing Commitment to Delivering Value to Stockholders
“Since our IPO in June 2013, our dividend has increased nearly fifteen-fold from its initial level and we have returned more than
Future dividends and share repurchase authorizations will be subject to approval by CDW's Board of Directors. The
About CDW
CDW Corporation (Nasdaq: CDW) is a leading multi-brand provider of information technology solutions to business, government, education and healthcare customers in
Forward-Looking Statements
Statements in this release that are not statements of historical fact are forward-looking statements within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, including without limitation statements regarding the future dividends, share repurchases, earnings growth, leverage ratio and other strategic plans of CDW. These forward-looking statements are subject to risks and uncertainties that may cause actual results or events to differ materially from those described in such statements. Although CDW believes that its plans, intentions and other expectations reflected in or suggested by such forward-looking statements are reasonable, it can give no assurance that it will achieve those plans, intentions or expectations. Reference is made to a more complete discussion of forward-looking statements and applicable risks contained under the captions "Forward-Looking Statements" and "Risk Factors" in CDW's Annual Report on Form 10-K for the year ended December 31, 2022 and subsequent filings with the SEC. CDW undertakes no obligation to update or revise any of its forward-looking statements, whether as a result of new information, future events or otherwise, except as otherwise required by law.
CDWPR-FI
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Investor Inquiries
Steven O’Brien
Vice President, Investor Relations
(847) 968-0238
investorrelations@cdw.com
Media Inquires
Sara Granack
Vice President, Corporate Communications
(847) 419-7411
mediarelations@cdw.com
Source: CDW Corporation
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