Aircraft component makerTransDigm Group (
) isn't known for paying dividends to shareholders, but it's now
making a big exception.
The Cleveland-based firm announced Monday that its board of
directors approved a special dividend of $12.85 a share.
TransDigm will pay the dividend Nov. 5 to shareholders of record
Investors who want the outsized payout will need to buy the
stock before the ex-dividend date, which is generally two
business days before the record date.
TransDigm's special dividend gives its stock a yield of 8.6%,
the biggest in the Aerospace/Defense group. Group members Boeing
),General Dynamics (
) andNorthrop Grumman (
) have yields of 2.4% to 3.1%. All three pay regular quarterly
Companies tend to pay dividends from its earnings, but
TransDigm will use funds from a recent note offering by its one
of its subsidiaries, existing cash on hand and money from a term
loan to cover the large payout to shareholders.
"With the senior subordinated notes offering, incremental term
loan of $150 million and the $12.85 per share special cash
dividend, we believe we will have put in place a more efficient
capital structure," said CEO Nicholas Howley in a press
TransDigm lost money back in 2003, but has delivered higher
profits each year since. It has a three-year stability factor of
10, indicating a steady stream of income.
In its latest four quarters, earnings grew 42% to 72%. Sales
growth ranged from 39% to 54% over the same period. TransDigm's
profit and revenue gains are well above the minimum 25% increases
for leading stocks.
Analysts polled by Thomson Reuters see earnings jumping 50% to
$6.71 a share for its fiscal 2012, up from 34% growth in fiscal
2011. The company raised guidance for full-year profit and sales
TransDigm has been in a sharp uptrend for years. Despite
recent increasing market volatility, the stock is just shy of an
all-time high and extended after clearing a 136.44 buy point from
a flat base in August.
In another sign of strength, the stock's Relative Strength
line has hit an new high ahead of price.