The Dallas-based dairy company said it will pay the dividend April 2 to shareholders of record March 27. The company expects to take on $4.8 billion in new senior secured credit lines to pay the dividend, which it expects to amount to $1.93 billion.
Dean also reaffirmed first-quarter earnings targets but cut its full-year estimate to reflect increased interest expense. The company expects to make 44 to 46 cents a share for the quarter and $1.72 to $1.76 for the year. Analysts were looking for 46 cents for the quarter and $2.37 for the year.
"Given our financial and business characteristics, Dean Foods is ideally positioned to take advantage of current attractive credit market conditions to recapitalize our balance sheet and lower our total cost of capital," said finance chief Jack Callahan. "After a thorough analysis, we have targeted an initial leverage level that we believe is a prudent and efficient use of our balance sheet while preserving flexibility to meet our capital needs and growth objectives, including pursuing highly compelling tuck-in acquisitions."