To return more value to its shareholders, the board of directors of Dover Corporation (DOV) authorized an increase of 14.5% in its quarterly dividend. The increased dividend of 31.5 cents per share is expected to be paid on September 15 to shareholders of record as on August 31. The company hiked the dividend from 27.5 cents a share paid on June 15, 2011.
With this approval to increase the dividend, Dover registered the 56th consecutive year of paying higher dividend. Previously, Unum (UNM) increased its quarterly dividend by 5.7% in August 2010. The company’s dividend yield is 2.28%, much higher than that of the industry yield of 1.57% and that of its peers Ingersoll-Rand Plc (IR).
Dover has strong liquidity to support the dividend increase. The company ended the second quarter with cash and cash equivalents of $1.4 billion and cash from operations of $209 million.
Dover reported second-quarter adjusted income of $1.19 per share, pushing ahead of the Zacks Consensus Estimate of $1.19. Strong results across all the segments aided the company to deliver better than expected numbers.
In its earnings conference call, the company guided 2011 revenue growth in the range of 18% - 20%, representing an organic revenue growth of 12% - 14% and 6% growth from acquisitions. This is based on the assumption of higher volume, tax benefit and a slightly lower effective tax rate. The company also guided earnings in the range of $4.50 - $4.60 per share.
The Zacks Consensus Estimate for third-quarter 2011 is $1.18 per share. For full years 2011 and 2012, the Zacks Consensus Estimates for earnings are respectively, $4.59 per share and $5.28 per share.
Dover continues to pursue strategic acquisitions in a bid to improve its product offerings and complement its organic growth strategy. Dover foresees steady expansion in the global cell phone market as cell phones become increasingly indispensable for consumers.
We maintain our long-term “Neutral” recommendation on Dover Corp. The quantitative Zacks #3 Rank (short-term Neutral rating) for the company indicates no clear directional pressure on the shares over the near term.
New York-based Dover Corporation is an industrial conglomerate producing a wide range of specialized industrial products and manufacturing equipment.