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Family Dollar rewards shareholders following stock slide

Family Dollar’s annual dividend now exceeds a dollar following a 24% increase on Friday.

The annual payout now totals $1.04 following a decision by the Family Dollar board to elevate the quarterly dividend to 26 cents a share from 21 cents a share. In addition, the board authorized the repurchase of an additional $300 million in stock under an existing program that had only $94 million in authorization remaining.

"Our Board’s decision to maintain our remarkable record of 37 consecutive years of dividend increases shows their unwavering commitment to shareholders, and the increase of 23.8% reflects our confidence in the company’s long-term growth potential," said Howard Levine, chairman and CEO.

Both actions follow a first quarter financial performance for the period ended November 24, 2012 that left investors unimpressed and prompted a major sell off in shares. Sales growth for the operator of 7,500 stores was solid, up 12.7% to $2.4 billion, and same store sales were up a very respectable 6.6%. However, profits were lighter than expected as investments in price and a higher percentage of sales from lower margin food and consumables resulted in profits below analysts’ estimates. The company’s share price tumbled as it expressed concern about the financial headwinds facing its customers and provided a second quarter profit forecast that envisioned the possibility of a nominal increase when compared to the prior year.

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