Parker Hannifin Corporation
) raised its quarterly common stock dividend by 4.9% to 43 cents
per share. The dividend will be paid on Mar 1, 2013 to
shareholders of record as of Feb 8, 2013.
This marks Parker Hannifin's 251
consecutive year of dividend increase, reflecting its commitment
to returning value to shareholders. Prior to this, the company
had increased its dividend by 5.1% (from 39 cents to 41 cents per
share) in May 2012.
The dividend increase is part of Parker Hannifin's Win
Strategy. The company's Win Strategy, including dividend increase
and other growth actions, primarily aims to measure customer
service excellence through efficient business and cash management
strategies. This strategy was launched in 2001.
Over the past decade or so, Parker Hannifin has doubled its
operating cash flow from just $0.5 billion in 2001 to $1.5
billion in 2012. In addition, Parker has been able to generate
total shareholder return of about 200% as on Jun 30, 2012. In the
recently reported quarter (second quarter of fiscal 2013), Parker
generated cash flow of $354 million representing 11.2% of sales
compared with 8.2% of sales in the same period last year.
Additionally during the quarter, the company returned $112
million to its shareholders in the form of share repurchases and
For Parker, its business model is an impressive one that
allows it to generate sufficient capital, grow its balance sheet
and help return capital to shareholders. Moreover, we believe
that strategic acquisitions will expand the company's business
and improve its profitability over time.
The company's diversified revenue stream, strong capital
position and expanded business through acquisitions, along with
efficient capital management, are expected to support its profit
figures. However, the company's Industrial segment, remains a
drag on its profits.
Parker Hannifin currently carries a Zacks Rank #3 (Hold). We
believe that the announcement of a dividend increase will augur
well for the company and help boost shareholders' confidence.
Among other companies in the same sector,
Precision Castparts Corporation
) also returned cash to investors through dividend increases and
share repurchases recently.
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PARKER HANNIFIN (PH): Free Stock Analysis
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