) recently announced a 7% (2.5 cents) hike in its quarterly
dividend to 37.5 cents from the prior payout of 35 cents. This
marks the 58th consecutive year of dividend hike by Dover and
places the company in the fourth position with respect to the
longest stretch of consecutive annual dividend increases among
all publicly traded companies.
The increased dividend will be paid on Sep 16, 2012, to
stockholders of record as of Aug 30, 2012. Previously, Dover had
increased its quarterly dividend by 11% to 35 cents in Aug 2012.
The increased dividend will hike Dover's dividend yield from the
current 1.60% to 1.72%. Dover outscores its peers like
Barnes Group Inc.
) in terms of dividend yield and dividend growth rate. Dover's
5-year dividend growth rate of 11.55% is way ahead of the
industry average of a negative 1.35%. However, its payout ratio
of 26.41% is less than the industry average of 44.80%.
Nonetheless, with net margin of 11.13% almost close to industry
average of 11.73%, Dover can further improve its payout ratio.
The dividend hike comes on the heels of Dover's solid second
quarter results. Dover reported earnings from continuing
operations of $1.36 per share, 24% higher than the prior-year
quarter's earnings of $1.10 per share and beating the Zacks
Consensus Estimate of $1.29. Total revenue was $2.2 billion, up
9% year over year, but in line with the Zacks Consensus Estimate.
Dover witnessed solid growth from its businesses serving the
consumer electronics and refrigeration markets along with
contribution from energy and fluids businesses. Furthermore,
Dover's strategic decision to spin off certain parts of its
communication technologies businesses also contributed to the
growth. Additionally, revenues were driven by completion of four
For fiscal 2013, Dover expects revenue growth in the range of
7%-9% on the back of organic revenue growth of 3%-5%, while
acquisitions are expected to add 4%. It expects earnings to lie
in the band of $5.56-$5.71 per share. The Zacks Consensus
Estimate for EPS is at $5.30 per share and for revenues at $8.8
Dover has strong liquidity to support the dividend increase. The
company ended the second quarter with cash and cash equivalents
of $606 million and a manageable debt to capitalization ratio of
30.5%. Dover generated $383 million in cash from operations in
the first half of fiscal 2013.
Dover will continue to benefit from its active acquisition
pipeline, bookings and orders growth. The spin-off of certain
part of its communication technologies businesses into a
standalone, publicly-traded company will simplify Dover's
business profile and enable it to focus on its key growth spaces
- Energy, Fluids, Refrigeration & Food Equipment, and
Printing & Identification. The company's bookings and backlog
have increased from the prior-year levels in the second quarter.
Dover's sound balance sheet coupled with solid earnings growth
should allow the company to continue its dividend hikes and share
repurchases in the years ahead.
Dover currently retains a short-term Zacks Rank #2 (Buy).
N.Y.-based Dover is an industrial conglomerate producing a wide
range of specialized industrial products and manufacturing
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