CVR Energy Inc., the oil refiner and fertilizer maker that was taken over by billionaire investor Carl Icahn last year, rose to an all-time high after announcing a new quarterly dividend policy and a special dividend of $5.50-a-share.
CVR climbed 5.3 percent to $54.11 in New York, the highest closing price since the company was taken public by Goldman Sachs Group Inc. in 2007.
The special dividend, scheduled to be paid on Feb. 19 to shareholders of record as of Feb. 5, will result in a cash payout of about $392 million to Icahn, who owns 82 percent of the company’s shares. The annual dividend is expected to be $3 a share, beginning with a payment in the second quarter, Sugar Land, Texas-based CVR said in a statement today.
“The policy reflects the strength of our balance sheet, our fundamental ability to generate free cash flow and our confidence in the future prospects of our business,” Icahn, chairman of CVR Energy, said in the statement.
CVR and other refiners have rallied as U.S. crude production has risen to the highest level since 1993, outstripping demand in some regions and crimping domestic oil prices. CVR and HollyFrontier Corp. saw record profits in 2012 as they bought cheap oil and sold fuel at prices linked to the higher global cost of crude.
The dividends extend in part from CVR Energy’s ownership of CVR Refining LP, a master-limited partnership that began public trading this month. So-called MLPs don’t pay corporate income tax, leaving more cash for payments to holders.
Total expected payments amount to $7.75 a share, or a 15 percent yield on yesterday’s closing price, more than triple the 2012 dividends made by HollyFrontier, the highest dividend-paying independent refiner last year, according to data compiled by Bloomberg.