Honeywell (HON) Increases Annual Dividend Payout by 12%

Diversified conglomerate Honeywell International Inc. HON recently announced a 12% year-over-year hike in its annual dividend to $2.98 per share. The increased dividend will be payable from fourth-quarter 2017 and is scheduled to be paid on Dec 8 to shareholders on record as of Nov 17.

Based on the closing price of $141.74 on Sep 29, the proposed dividend affirms a yield of 2.1%. A steady dividend payout is part of the long-term strategy of Honeywell to provide attractive risk-adjusted returns to its stockholders. In addition, healthy dividend increases at periodic intervals have been one of the company’s strong points. Since 2010, Honeywell has raised dividend in double digits eight times, including the current hike.

Honeywell has outperformed the industry with an average year-to-date return of 22.4% against a decline 1.7% for the latter. Its diversified business portfolio has the potential to earn consistent above-average returns and mitigate operating risks. The company’s diligent focus on working capital management, free cash flow generation and a conservative balance sheet remain key positives amid a challenging macroeconomic environment.

The company’s balanced mix of long- and short-cycle businesses, along with decent organic growth in new products and expansion in high-growth regions augur well on a long-term perspective. With a flexible yet disciplined focus on cost and productivity, Honeywell remains focused on increasing its presence in high-growth regions. Population growth, urbanization and infrastructure development continue to create attractive opportunities across its entire portfolio. Additionally, the company is building a robust pipeline of new products. Honeywell has regularly fine-tuned its portfolio, having sold about 60 of its units (accounting for $7 billion in sales) since 2002 and acquiring another 90 companies contributing $14 billion in revenues over the same period. These factors bode well for its accelerated growth in 2017.

Honeywell expects to deliver strong earnings growth in the forthcoming quarters by continuing to invest in new products and technologies and increasing footprint in high-growth markets.

Honeywell currently has a Zacks Rank #2 (Buy). Other notable stocks in the industry include Federal Signal Corporation FSS, Crane Co. CR and Barloworld Limited BRRAY, each carrying Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Federal Signal has beaten earnings estimates thrice in the trailing four quarters with an average positive surprise of 9.5%.

Crane has a long-term earnings growth expectation of 10.1%. It has beaten earnings estimates in each of the trailing four quarters with an average positive surprise of 4%.

Barloworld has a long-term earnings growth expectation of 17.3%.

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