Alimentation Couche-Tard raises dividend amid growing concerns about U.S. debt

Alimentation Couche-Tard, the gas station and convenience store retailer, this week raised its quarterly dividend and maintained an aggressive outlook for the remainder of the year.

The Montreal-based company is one of the world’s largest independent operators of gas stations. In North America, it has more than 7,500 stores. Alimentation Couche-Tard also operates in Europe and overseas.

The company’s latest earnings announcement, released on Tuesday, saw its revenues decline by 1 percent in the fourth quarter to $4.4 billion. The decrease was driven largely by fuel costs. However, a net profit of $152.6 million in the fourth quarter represented a decrease of 0.6 percent from the same quarter in the previous year. For the full year, its revenue increased by 2.5 percent to $17.3 billion, and the company’s earnings increased by 10.1 percent to $674.8 million.

Overall, the company still anticipated financial growth for 2019. Alimentation Couche-Tard forecasts a revenue growth rate of between 3 and 4 percent for this year. And, executives told reporters on Tuesday, its earnings per share is expected to grow by at least 15 percent, “meaning higher levels” for 2019.

The company’s decision to raise its quarterly dividend for the 20th consecutive year is not a surprise. In its 11-Q filed with the Securities and Exchange Commission, Alimentation Couche-Tard reported that “after an analysis of the factors that currently underlie the payout, the board concluded that the proposed dividend for the next two quarters is sustainable.” That said, the decision comes as other companies in the sector have ended their distributions. Two weeks ago, Marathon Petroleum Corporation cut its quarterly dividend by 56 percent from 85 cents per share to 40 cents. The move cut Marathon Petroleum’s dividend by 41 percent.

Despite the fact that it is increasing its dividend, Alimentation Couche-Tard is not planning any stock buybacks. CEO Alain Bouchard told the Montreal Gazette that the company’s priority is to pay down debt. The company’s long-term debt totaled $7.6 billion as of December, and the company’s total equity stood at $4.5 billion, net of debt. The decision to pay down debt, Bouchard said, “is also a reflection of our leverage in the U.S. Over the past two years, the U.S. account for 70 percent of Alimentation Couche-Tard’s profit. That’s up from 50 percent. In other words, the U.S. is becoming the larger profit contributor.”

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