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Nordson's (NDSN) Board Approves 17% Hike in Dividend Rate

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Nordson Corporation NDSN, on Aug 10, has announced rewards for shareholders in forms of a hike in the quarterly dividend rate. The news came in almost a week before the release of third-quarter fiscal 2018 (ended July 2018) results.

It is worth noting here that the company’s shares have gained 0.3% on Aug 10, ending the trading session at $133.43. We believe that such shareholder-friendly policies of the company reflect a strong cash position and belief in profitability in the future.

Inside the Headlines

As revealed, Nordson’s board of directors has approved a 17% or 5 cents per share hike in the quarterly dividend rate, which has now moved from 30 cents to 35 cents. On an annualized basis, the dividend increased to $1.40 from $1.20 per share. This move marks the company’s consecutive 55th annual dividend increase.

Nordson will pay the revised dividend on Sep 4, 2018, to shareholders of record as of Aug 21.

Sound Capital-Allocation Strategies

Nordson follows sound capital-allocation strategies, aiming to improve values for shareholders. It uses free resources for the development of its product line, making acquisitions and rewarding shareholders through share buybacks and dividend payments.

During fiscal 2012-2017, the company’s share repurchases and dividend payments amounted to $1 billion. Notably, the company paid dividends of $34.7 million to its shareholders while purchasing $5 million of treasury shares in the first half of fiscal 2018 (ended April 2018). We believe that impressive financial performance in the quarters ahead is likely to enable the company to continue rewarding its shareholders handsomely through dividend increments.

Key Picks

Nordson, with approximately $7.8-billion market capitalization, currently carries a Zacks Rank #4 (Sell). This precision dispensing equipment manufacturer is slated to report third-quarter fiscal 2018 results on Aug 20, 2018. Organic volumes in the to-be-reported quarter are predicted to fall 2-6%. Specifically, business for dispense products — that mainly serves customers in the automotive and electronic end markets — is predicted to be soft.

The Zacks Consensus Estimate for the fiscal third quarter is pegged at $1.60 per share. On the other hand, estimates for fiscal 2018 (ending October 2018) have been revised downward by 0.2% in the past 60 days to $6.00 per share while that for fiscal 2019 (ending October 2019) edged down 0.4% to $6.69.

Nordson Corporation Price and Consensus

Nordson Corporation Price and Consensus | Nordson Corporation Quote

Moreover, the company’s share price has fallen 8.9% since the beginning of the year, worse than 4.5% fall recorded by the industry.

Some better-ranked stocks in the industry are Altra Industrial Motion Corp. AIMC, Chart Industries, Inc. GTLS and Barnes Group Inc. B. While both Altra Industrial Motion and Chart Industries sport a Zacks Rank #1 (Strong Buy), Barnes Group carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

In the past 60 days, earnings estimates for each of these stocks improved for the current year and the next year. Further, the average positive earnings surprise for the last four quarters was 4.01% for Altra Industrial Motion, 29.36% for Chart Industries and 6.88% for Barnes Group.

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