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United Technologies' (UTX) Board OKs 5% Hike in Dividend Rate

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United Technologies Corporation UTX has announced that it is rewarding shareholders in the form of a hike in the quarterly dividend rate. We believe that such shareholder-friendly policies of the company reflect a strong cash position and its potential to improve profitability in the months ahead.

As revealed, United Technologies’ board of directors approved 5% or 3.5 cents per share hike in the quarterly dividend rate, which moved from 70 cents to 73.5 cents. On an annualized basis, the dividend increased to $2.94 from the earlier rate of $2.80 per share. This move marks the third consecutive increase in quarterly dividend rate.

The company will pay the revised quarterly dividend on Dec 10, 2018, to shareholders of record as of Nov 16.

Sound Capital-Allocation Strategies

United Technologies 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.

The company’s annual dividend payments amounted to $2,074 million in 2017, while shares worth $1,453 million were repurchased during the year. In the first half of 2018, the company paid dividends worth $1,070 million to shareholders, while purchasing $52 million of common shares.

We believe that impressive financial performance in the quarters ahead is likely to enable the company to continue rewarding shareholders handsomely through dividend increments.

Earnings Projections and Price Performance of United Technologies

United Technologies, with approximately $104.9-billion market capitalization, currently carries a Zacks Rank #2 (Buy). The company is poised to gain from stronger Otis, Climate Control and Security, Pratt & Whitney, and Aerospace Systems sales as well as innovation investments and cost-cutting measures.

For 2018, the company anticipates adjusted earnings per share of $7.10-$7.25, higher than $6.95-$7.15 stated earlier.

In the past 60 days, the Zacks Consensus Estimate for earnings on the stock has increased 0.1% to $7.23 for 2018 and 0.5% to $7.92 for 2019. Further, these estimates represent year-over-year growth of 8.7% for 2018 and 9.6% for 2019.

United Technologies Corporation Price and Consensus

United Technologies Corporation Price and Consensus | United Technologies Corporation Quote

In the past three months, the company’s share price has increased 3%, outperforming 1.2% growth recorded by the industry.

Other Stocks

Two top-ranked stocks in the industry are Macquarie Infrastructure Company MIC and Danaher Corporation DHR. While Macquarie Infrastructure sport a Zacks Rank #1 (Strong Buy), Danaher carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

In the past 60 days, earnings estimates on the stocks remained unchanged for the current year. Further, earnings surprise for the last reported quarter was a positive 8.05% for Macquarie Infrastructure and 4.95% for Danaher.

Earnings estimates of another company, Honeywell International Inc. HON have improved for the current year in the past 60 days. Also, it delivered positive average earnings surprise of 2.44% for the last four quarters.

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