Weyerhaeuser Co., which has been hemorrhaging cash because of the moribund U.S. housing market, said Tuesday it is cutting its quarterly dividend again, this time by 80 percent.
The timber and wood products company is lowering its payout to 5 cents per share from 25 cents. That follows a reduction last December to 25 cents from 60 cents. The two decreases will help the Federal Way, Wash., company preserve cash as the recession hurts demand for its plywood and lumber and rivals enjoy a lighter tax burden.
The collapse in housing construction has hammered the revenue of companies like Weyerhaeuser, whose sales depends on housing. In its latest quarter, overall sales fell 37 percent while sales of wood products slid 44 percent.
"They are not generating enough cash to service their debt let alone pay the dividend they had," said D.A. Davidson analyst Steven Chercover. "So it makes sense to cut the dividend."
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Besides the recession-driven housing downturn, Weyerhaeuser pays higher taxes than rivals that are structured as real estate investment trusts.