In its efforts to share more profits with shareholders,
) recently announced a 10% increase in its quarterly dividend to
11 cents from 10 cents per share paid on Nov 13, 2013. The
increased dividend will be paid on Apr 1, 2014 to shareholders of
record on Mar 14.
Based on the closing share price of $43.24 on Feb 20, 2014,
the new dividend implies a yield of 0.9%. The current dividend
yield is better than that of another company in the diversified
) that has a yield of 0.53%.
The company has always considered increasing dividend to
enhance its shareholders value. Earlier, in Mar 13, 2013, the
board of directors raised the dividend to 10 cents from 9.1
The dividend increase is well supported by the company's
healthy financial position. Its cash and cash equivalents stood
strong at $507.3 million with no long-term debt. The company's
cash from operating activities was $226.6 million while its free
cash flow was $103.7 million.
With approximately 92.4 million weighted shares outstanding at
the end of fourth quarter 2014. The company needs to dish out
$36.96 million per year as dividend. Its strong financial
position well cushions the payout.
The company, over the past few years, has been benefiting from
the diligent execution through its Lean Six Sigma and global
sourcing efforts. In addition, the aftermarket solutions are very
profitable for ITT. The company has been working on the expansion
of its aftermarket service and in 2013, it contributed about 20%
to the top line.
ITT is also likely to have siginificant benefits from the
continuing growth in global oil and gas pump as well as
automotive markets. Moreover, as much as 30% of its revenues are
derived from developing nations, which are expected to grow twice
as much as the developed nations in the long run.
Another stock in the diversified operations industry that was
in the news for raising its dividend is
). The company had hiked its quarterly dividend from 63.5 cents
to 85.5 cents per share on Feb 12, 2014.
ITT currently carries a Zacks Rank #3 (Hold). A better-ranked
stock that can be considered in the same sector is
Hutchison Whampoa Ltd
) with a Zacks Rank #2 (Buy).
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