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Allegion Board Approves 29% Hike in Quarterly Dividend Rate

Zacks Equity Research

Allegion plc ALLE recently announced that it is rewarding shareholders with a hike in quarterly dividend rate. 

Notably, this is in sync with the company’s balanced capital allocation strategy that supports accretive acquisitions, organic growth investments as well as shareholder distributions. We believe that the move reflects its strong cash position.

Inside the Headlines

As revealed, Allegion’s board of directors approved 29% or 6 cents per share hike in the quarterly dividend to 27 cents. On an annualized basis, the dividend increased to 90 cents from 64 cents per share.

Notably, the company will pay the revised amount on Mar 29, 2019, to shareholders of record as on Mar 15.

Allegion firmly believes in rewarding shareholders handsomely through dividend payments. Over the last four years (2014-2017), the company hiked dividends every year, increasing the annual rate from 32 cents in 2014 to 64 cents in 2017.

Our Take

Allegion perceives that stronger revenues, lower taxes, ongoing pricing actions and greater operational efficacy will boost its earnings in the upcoming quarters. For 2018, the company currently expects earnings to be in the range of $4.43-$4.50 per share, above $4.35-$4.50 stated earlier. Notably, the company is expected to report fourth-quarter and full-year 2018 results on Feb 19, before the market opens.

Also, the company expects that stronger demand for its electronic products, strength of residential and non-residential businesses and increased connected security solutions and electronic locks' demand will likely boost revenues.

In the past six months, this Zacks Rank #3 (Hold) stock has gained 7.8% against industry’s decline of 9.9%.

However, material cost inflation is escalating the company's aggregate costs of late. Rising costs, if unchecked, will continue to dent Allegion's margins.

Stocks to Consider

Some better-ranked stocks from the Zacks Industrial Products sector are Axon Enterprise, Inc AAXN, Alarm.com Holdings, Inc. ALRM and Avery Dennison Corporation AVY. While Axon Enterprise and Alarm.com Holdings sport a Zacks Rank #1 (Strong Buy), Avery Dennison carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Axon Enterprise surpassed estimates in each of the trailing four quarters, the average positive earnings surprise being 391.67%.

Alarm.com Holdings exceeded estimates in each of the trailing four quarters, the average positive earnings surprise being 27.26%.

Avery Dennison surpassed estimates thrice in the trailing four quarters, the average positive earnings surprise being 3.63%.

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