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Ingersoll-Rand Maintains Steady Dividend

Zacks Equity Research

Ingersoll-Rand Plc (IR), an industrial goods manufacturer, recently declared second quarter 2013 dividend of 21 cents per share or 84 cents on an annualized basis, representing a 31.25% year-over-year increase. The dividend is payable on Jun 28 to shareholders of record as of Jun 14.

Based on the closing price of $53.92 on Apr 3, 2013, the dividend affirms a yield of 1.6%. A steady dividend payout is part of the long-term strategy of Ingersoll-Rand to provide attractive risk-adjusted returns to its stockholders. In addition, decent dividend increases at periodic intervals have been one of the company’s most attractive features.

Ingersoll-Rand had earlier raised the quarterly dividend payout from 16 cents to 21 cents per share or from 64 cents to 84 cents on an annualized basis in Mar 2013. Prior to that, Ingersoll-Rand raised its quarterly dividend in Mar 2012 from 12 cents to 16 cents and in Jun 2011 from 7 cents to 12 cents per share.

The company also has a share repurchase program in place wherein it can repurchase $2 billion worth of shares over a period of time either through open market transactions or privately negotiated transactions at the discretion of management. In fourth quarter 2012, Ingersoll-Rand repurchased 10 million shares to bring its tally to18.4 million shares worth $840 million in 2012. Over the years, Ingersoll-Rand has consistently returned significant cash to its shareholders through dividends and share repurchases.

Ingersoll-Rand designs, manufactures, sells, and services a range of industrial and commercial products across the globe. From microturbines that transform landfill methane gas into power to electric-powered golf cars with near zero emissions, the company offers products and services that reduce energy consumption and costs and decrease harmful environmental emissions. With over $14 billion in revenues in 2012, the company has several market-leading brands, including Club Car, Hussmann, Ingersoll Rand, Schlage, Thermo King and Trane.

However, Ingersoll-Rand faces stiff competition from other players in the market such as Altra Holdings, Inc. (AIMC), The Babcock & Wilcox Company (BWC), and EnPro Industries, Inc. (NPO), each carrying a Zacks Rank #1 (Strong Buy). Ingersoll-Rand presently carries a Zacks Rank #2 (Buy).

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