What an interesting turn of events for Florida agriculture and citrus name Alico (ALCO) . The company on Monday announced a 178% increase in its quarterly dividend from 18 cents a share to 50 cents, putting the indicated dividend yield at 5.8%. This move comes on the heels of Alico doubling its dividend back in December from nine cents to 18 cents. Shares are up about 13% since the news was announced.
Alico is in the midst of selling some assets, namely non-strategic ranch land. Alico currently owns 84,000 acres, down from about 99,000 at the end of its fiscal year (September). Alico's crown jewel is the 49,000 acres of citrus land it owns; that's around 76 square miles, or the equivalent of an area that is 8.75 miles by 8.75 miles. Alico's enterprise value (or EV, which is market cap minus cash plus debt) is about $384 million, which puts the EV per citrus acres at just over $7,800. That calculation places no value on the 35,000 acres of ranch and other land held by Alico and is a homegrown calculation I use for comparative purposes when companies own land.
Being a longtime ALCO shareholder has been boring over the years and not very fruitful (just check out its chart). I gave up on the name several years ago, but eventually found my way back to it as my interest in agricultural land grew and I took a position in late March. I hope recent moves by the company are a real foray into shareholder value creation, but time will tell.
Speaking of boredom, I closed my position in Manchester United (MANU) after a seven-month hold. While it was a profitable trade, it was time to do some rebalancing and MANU found itself on the chopping block. That's a very short hold for this value investor, but I don't see the upside in Manchester United that I do in other holdings. Shares breached $20 in April but settled back to earth fairly quickly and closed Tuesday at $15.46.
