The concept of companies returning more and more to their shareholders through various types of dividend-related events is always something that has intrigued me. With that said, I wanted to highlight one particular company that has recently announced a 7.14% increase in its regular quarterly payout.

Rock-Tenn Company (RKT) – On Friday, October 24, Rock-Tenn Company, which now possesses a forward yield of 1.49% ($0.75/share annualized), announced a 7.14% or $0.0125/share increase, from its prior payout of $0.175/share, for the upcoming quarter.

Headquartered in Norcross, Georgia, Rock-Tenn Company manufactures and sells corrugated and consumer packaging products in the United States, Canada, Mexico, Chile, Argentina, Puerto Rico, and China. The company operates in three segments: Corrugated Packaging, Consumer Packaging, and Recycling.

Based on Friday’s closing price of $50.49/share, The Rock-Tenn Company now possesses a market capitalization of $7.22 billion and a forward yield of 1.49% ($0.75). Its trend behavior, although positive in both the near-term and the long-term (given the fact shares are trading 6.82% above their 20-DSMA, 3.91% above their 50-DSMA, and 0.57% above their 200-DSMA), should get a boost from its upcoming earnings which are due out on November 3. If the company can demonstrate a very solid quarter and surpass Wall Street’s expectations of $1.05/share in terms of EPS, I strongly believe we could see its shares reach a sustainable range of $54.00/share-to-$57.50/share by late-November.

MLP Prospects Could Bode Well For Investors

On Tuesday October 7, analysts at BofA/Merrill upgraded shares of both Rock-Tenn and sector counterpart International Paper (IP) to Buy rating from a previous rating of Neutral. According to its note, the firm says it is increasingly convinced the companies will attempt to convert a portion of their businesses to MLPs, and a conservative upside potential of at least 20% now exists in the shares of both companies if an MLP conversion were to occur. Based on Friday's closing price of $50.49/share, the conservative upside potential of at least 20% could mean shares could see at least $60 if and when an MLP conversion is announced.

Conclusion

For those of you who may be considering a position in The Rock-Tenn Company, I strongly recommend keeping a close eye on both the company's dividend and earnings behavior over the next 12-18 months as each of these catalysts should directly impact the long-term value of the company’s shares.