Ingersoll-Rand Offers 18% Quarterly Dividend Hike (IR)
By: Ned Piplovic,
Featured Image Source: Company Website
After paying out dividends for more than a century, Ingersoll-Rand plc (NYSE:IR) continues to reward its shareholders with a rising dividend income and the company boosted its quarterly dividend payout nearly 18% for the upcoming dividend distribution.
The upcoming quarterly dividend payout bump marks the company’s eight consecutive year of annual dividend increases. Over the past 15 years the company cut its quarterly dividend amount only once – from the $0.18 quarterly dividend payout in the second quarter of 2009 to a $0.07 payout for the subsequent period.
In addition to the steadily rising dividend distributions, the company provided a consistent asset appreciation for a dual benefit that rewarded the company’s shareholders with a total return of more than 20% over the past year and nearly doubled the shareholders’ investment over the past three years.
The company’s half-year results and estimates for the remainder of 2018 look promising and support a continued growth outlook. Compared to the same period last year, the company’s net revenue increased 9%, and a 50 basis points improvement in adjusted operating margin resulted in adjusted earnings per share (EPS) boost of 24% from $1.49 for the second quarter 2017 to the current $1.85.
In light of its performance for the first half of 2018 that has exceeded expectations, the company raised its guidance for the full year. The earnings guidance increased 6% to $5.50 per share and the year-over-year total revenue growth rose from an original forecast range 3%-3.5% to a revised range between 5% and 5.5%. Additionally, all the forecast and guidance figures are inclusive of all the known effects of the current section 232 tariffs imposed on imported steel and aluminum. Therefore, any trade agreements that reduce the current tariffs could provide additional gains late in the year.
The company will distribute its next dividend on company’s September 28, 2018 pay date to all its shareholders of record prior to the September 6, 2018 ex-dividend date.
Ingersoll-Rand Plc (NYSE:IR)
Headquartered in Swords, Ireland and founded in 1872, Ingersoll-Rand plc designs, manufactures, sells and services industrial and commercial products under the American Standard, ARO, Club Car, Nexia, Thermo King and Trane brands. The company’s climate segment offers consumer and industrial machinery, as well as heating ventilation and air conditioning (HVAC) systems, including air conditioners, air exchangers, air handlers, auxiliary power units, chillers, coils and condensers. Additionally, the segment offers furnaces, heat pumps, home automation, humidifiers and transport refrigeration solutions. In addition to manufacturing and installing new systems, this segment also offers support services, including maintenance repair and refrigerant reclamation. The Industrial segment provides air treatment, engine starting, fluid handling, precision fastening and mobile golf systems. Furthermore, this segment manufactures compressors, blowers, dryers, filters, golf vehicles, hoists, power tools, pumps, rough terrain vehicles, utility vehicles and winches. This segment also offers replacement parts, accessories and supplies.
The company hiked its quarterly dividend payout 17.8% from the $0.45 payout in the previous period to the current $0.52 quarterly dividend amount. This new amount corresponds to a $2.12 annualized distribution and a current yield of 2.1%, which is almost 16% above the company’s 1.8% five-year average dividend yield. While the company’s current yield matches closely the 2.08% average yield of the entire Industrial Goods sector, it is almost 70% above the 1.24% simple average yield of Ingersoll-Rand’s direct competitors in the Diversified Machinery industrial segment. Moreover, Ingersoll-Rand’s current yield is also 32% above the 1.58% average yield of the segment’s only dividend-paying companies.
Over the past eight consecutive years, the company advanced its total annual dividend payout more than 650%, which is equivalent to an average annual growth rate of nearly 30%. Ingersoll-Rand’s current 33% dividend payout ratio indicates that the company’s earnings are more than sufficient to cover the dividend distributions and that the company can easily support continued dividend hikes.
The company’s share price experienced some volatility over the first half of the trailing 12 months and dipped 6% before bottoming out at its 52-week low of $80.39 on April 24, 2018. However, the share price recovered that minor loss within a week and rose almost 27% before closing on August 29, 2018 at its 52-week high of $101.75. This closing price was 19% higher than one year earlier and more than 100% higher than it was five years ago.
The strong share price growth and rising dividend income combined to offer shareholders a 23.3% one-year total return and a total return of more than 90% over the past three years.
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Ned Piplovic is the assistant editor of website content at Eagle Financial Publications. He graduated from Columbia University with a Bachelor’s degree in Economics and Philosophy. Prior to joining Eagle, Ned spent 15 years in corporate operations and financial management. Ned writes for www.DividendInvestor.com and www.StockInvestor.com.