Tyco Hikes Dividend


The largest pure-play fire protection and security company Tyco international Ltd (TYC) recently announced its decision to hike its annual dividend by 4 cents to 64 cents per share. The increased dividend will be paid on a quarterly basis of 16 cents each starting May 2013, representing an increase of 7% from the prior annual dividend.

The strength of Tyco’s business model is reflected in the company’s strong cash generation capabilities and its commitment to returning value to shareholders. We believe that continued increase in dividends will enhance investor loyalty through higher returns from the stock. Cash and cash equivalents of Tyco were $501 million in the first quarter of 2013.

The increase in dividend follows healthy first quarter 2013 results, whereby both revenues and earnings surpassed our expectations and comprehensively beat the Zacks Consensus Estimates. Tyco reported earnings per share (EPS before one-time items) of 40 cents in the first quarter versus 26 cents in the year-ago quarter. Revenues for the quarter increased 5.0% year over year to $2600 million. The hike in dividend reflects continued strength in the company’s performance, backed by solid operating results and investments along with the diligent execution of its strategic plans.

Tyco provides latest fire protection and security products and services to more than three million customers across the globe. Tyco has more than 70,000 employees in more than 1,000 locations across 50 countries, serving various end markets, including commercial, institutional, governmental, retail, industrial and energy, residential and small business.
However, the company needs to be wary of its competitors, which include formidable names such as Jardine Strategic Holdings Ltd (JSHLY) and Crane Co (CR).

Tyco International Ltd currently has a Zacks Rank #2 (Buy). One of its competitors, Macquarie Infrastructure Company LLC (MIC) also carries a Zacks Rank #2 (Buy).

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