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In a bid to reward shareholders, Lennox International Inc. LII recently announced a 19.5% hike in quarterly dividend. The company has been driving shareholder value through regular dividend hikes, share repurchase programs and reinvesting in business.
On May 19, Lennox increased quarterly cash dividend to 92 cents per share from 77 cents paid earlier. The dividend will be payable on Jul 15, 2021 to its shareholders of record as of the close of business on Jun 30.
Notably, solid capital allocation strategy — which is a testimony to the fact that it is well positioned amid the COVID-19 pandemic — is driving long-term sustainable growth and shareholder value.
In second-quarter 2019, its board approved an increase in the dividend rate to 77 cents per share from 64 cents. Notably, this energy-efficient climate-control solutions provider company has been approving dividend hikes for more than a decade now. Notably, it paid dividends of $118 million in 2020.
Moreover, Lennox is highly active on the buyback front. In 2020, the company repurchased $100 million shares of its common stock. Subsequently, during first-quarter 2021, it returned $30 million to shareholders through dividends and $200 million through repurchase of common stock.
Can Lennox Sustain Dividend Hikes?
Lennox’s business has been banking on underlying demand fundamentals in core residential and commercial HVAC/R markets, favorable price and mix along with sourcing and engineering-led cost reductions. For first-quarter 2021, the company’s adjusted earnings of $2.27 per share increased a notable 305% year over year on the back of solid segmental results.
Lennox has been witnessing strong demand across businesses. It is capitalizing on market growth and share gain opportunities with strong operational execution. For 2021, it raised its guidance for revenues, earnings and free cash flow. The company has plans to buy $200 million additional shares through the repurchase program.
Lennox has solid prospects, as is evident from the Zacks Consensus Estimate for 2021 earnings of $11.74 per share, indicating growth of 18.1% from the year-ago reported figure.
Shares of Lennox — which shares space in the Zacks Building Products - Air Conditioner and Heating industry with Watsco, Inc. WSO, AAON, Inc. AAON, and Comfort Systems USA, Inc. FIX and currently carries a Zacks Rank #2 (Buy) — have broadly outperformed the industry in the past year. Its shares have gained 75.5% in the said period compared with industry’s 1.2% rally.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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Watsco, Inc. (WSO) : Free Stock Analysis Report
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