airborne....Hayes' explanation for what he called a "modest" increase...as explained by pjl,...makes sense. I too am disappointed...but I'm willing to listen to Hayes' explanation. You made reference to the small increase "compared to history". In that context, it's important to note that at no time during the David or Chenevert era of larger dividend increases was UTC's "history" anything like it is at present. This year Pratt has begun a production ramp up of a new engine unlike anything experienced in decades. That's a good thing, very good thing, for the future....that is ~2020+. But, an often unappreciated fact of the business is that Pratt will lose money on every single one of the engines produced. The profit comes well down the road from aftermarket sales. The fact is, that is not good news for investors dependent on large dividend increases...they won't live long enough to see the great future benefits,... me included. If all goes well they will see a significant share price increase however. And, consider this: 2016, the first and toughest year for Pratt's ramp up, and the dividend increase was 3%. It's all but certain that will be the lowest increase.....assuming the GTF continues to do well, future increases will grow along with earnings. Admittedly, though, when you're older it's hard to get excited about the future....but at least an effort can be made to understand it.
Agree the 3% is disgusting. Looking at the past 10 years and under prior CEO even after the Goodrich acquisition and International Aero Engine deal which were the largest UTC deal ever within a few months of each other the Board and then CEO raised the dividend near double digit. Yesterday as the stock rose I sold another tranche. Also a year ago the stock was around 119. and now analyst are happy around 105. There are better companies around for me.
airborne, i'm not spinning it one way or the other--just letting you know what he said. The point is, Hayes is signaling what he intends to do going forward--if the payout ratio is at or above 40%, you can expect a smaller than average increase. If earnings go up (real earnings, not EPS) the payout ratio will go down and dividend increases will be larger. But right now earnings are going down YOY, so as I said in a previous post, this does not bode well for those of us who would like to see significant increases in the dividend in the near term.
Hayes or you can spin it however you wish. A 3% increase is next to nothing for the stockholders. A big disappointment when compared to history. The 3% was disgusting!!
At this morning's Q1 conference call, CEO Greg Hayes gave some insight into his philosophy regarding future dividend increases. Basically, he said that UTC will increase dividends in line with earnings increases, and maintain a payout ratio of 35-40%. The payout ratio is now 41% which is slightly above his target range, and may explain why the increase was so low.
Airborne I am with you. Not long ago I cut my holding by a third as I figured the dividend would be increased close to 10percent which UTC always did. I do not remember such a small dividend increase over the last 10 years. I hate the news which signal the CEO and the Board has little confidence in the earnings power. It is time for the Board to replace Greg or be replaced themselves. The company has truly lost its way.
I was never a big Washington Redskins (oops! I mean Native American) fan but their coach George Allen once said "The future is now!" That is especially true for us old people. I do not have much of a future left. It would be nice to know that I can continue my bad habits until I die. Hayes better get going or go.
W2B,.....Nice to see you climb out of the foxhole. Your bullish call is scary. BTW, Hayes was afraid of a strong USD, not a weak one
July 21, 2015
United Technologies Corp. Chief Executive Gregory Hayes delivered disappointing second-quarter results in which the company cut its annual earnings forecast after overestimating its airplane aftermarket business and banking on an economic rebound in Europe that failed to arrive.
The company’s shares fell 7% to $102.71 in 4 p.m. composite trading on the New York Stock Exchange on Tuesday, its largest one-day point decline since Sept. 17, 2001, the first trading day after the Sept. 11, 2001, terrorist attacks. The maker of Pratt & Whitney jet engines, Otis elevators and Carrier air conditioning equipment reported a 5% decline in second-quarter sales. The drop was driven by weakness in its Otis elevator unit, which struggled in Europe and slowed in China, as well as the negative effect of the strong dollar.
I believe UTX will beat big time. Didn't Hayes say the weak dollar and weak China were bad. Well the dollar is stronger and China has stopped going down. That should be good for UTX. Hayes has something to prove because of the HON thing. He will do everything he can to show good numbers. Most important is the Fed is talking tomorrow. These stocks are not trading on earnings but on what the central bankers are doing. Yellen will continue to say what the market wants to hear. No interest rate increase for as far as the eyes can see. The market will like that and stocks will go up including UTX.
If it does not tank today, I am taking more off the table and putting it into the income fund. Have to be guaranteed income at my age. This stock used to be solid under the three preceding CEOs. I wasn't a super-fan of all of them but Hayes ranks 10th behind the other 3. How do you like that math?
A miss will be seen as very negative and will send the stock back into the '90s. Even meeting estimates will send the stock down--the market is expecting a beat since FX has been a tailwind all of Q1. I think it will take an EPS beat of at least 2 cents to just stay where it is. Hitting the estimates won't cut it--options traders are betting against UTX 7 to 1. Could be ugly!