Analyst Note| David Whiston, CFA, CPA, CFE |
After the market closed on Aug. 18, Winnebago Industries announced a large dividend increase and the relocation of its corporate headquarters. We are not changing our fair value estimate. The quarterly dividend will rise by 50% to $0.18 per share starting with the first dividend payable in fiscal 2022 on Sept. 29 to shareholders of record at the close of business on Sept. 15. We calculate an aggregate annual dividend of about $24.2 million, which we believe the company can easily service, given free cash flow in the first nine months of fiscal 2021 was about $124.4 million and the company’s RV backlog at May 29 was about $3.7 billion. The dividend yield is about 1%. We don’t think an incremental roughly $8 million in annual dividend payout means that acquisitions will necessarily slow, as management will likely keep looking for outdoor lifestyle companies with a premium brand such as the July 20 announcement of a deal to buy Barletta pontoon boats as discussed in our note that day. We would like to see the company integrate Barletta before making another large deal. We see the RV industry’s excellent demand along with Winnebago’s desirable brand portfolio as enabling good prospects for the foreseeable future and are glad to see management return incremental cash to shareholders to share the company’s good fortune.