A Well-Packaged Dividend: MeadWestvaco (MWV)

According to a recent packaging industry report by Research and Markets, 40% of industry players are looking to increase their marketing expenditure over the next 12 months, with only 36% looking to decrease it. This indicates that a level of confidence is returning to the sector following two tough trading years.

With this in mind investors may be looking for quality stocks in the sector to consider for their portfolios. One such stock is MeadWestvaco (MWV), a recognized global leader in its field.

MeadWestvaco (MWV), which reported total sales of $6.4 billion last fiscal year, provides packaging solutions into the beauty and personal care, healthcare, food, beverage, food service, tobacco, home & garden, commercial printing and media & entertainment industries.

The company, which has a 150 year track record, has a presence in more than 30 countries and has been represented on the Dow Jones Sustainability index for the last six years. This indicates a company which is well positioned to weather a testing economic climate.

For shareholders seeking a stock which pays a good dividend, MWV (MWV) fits the bill offering a yield of around 3.9%.

The company has encouragingly seen an improvement in operating conditions over the first quarter of the new financial year. When MWV (MWV) reported earnings in April, first quarter 2010 net income was $24 million or $0.14 per share while sales in the first quarter of 2010 increased 3.5% to $1.40 billion from $1.35 billion in the first quarter of 2009.

The company is also pretty upbeat about its outlook. The firm has gained market share with new and enhanced products in key markets in addition to some modest increases in overall demand, and benefited more fully from these growth opportunities from a streamlined manufacturing footprint and lower overhead costs.

Strong growth in emerging markets including Brazil and Asia was also noted as a driver of earnings growth and dividends for the organization going forward.

Despite the tough and uncertain market conditions, management also appears to see value in the stock having repurchased approximately 1.1 million shares for $26 million (for an average price of $23.63) after receiving permission from shareholders to do so in the first quarter of 2010.

For investors seeking a strong dividend paying stock and looking at exposure to high growth emerging markets as well as a business which is positioned to deliver long-term value MeadWestvaco (MWV) could be a stock to consider.