Baker Hughes Incorporated

Baker Hughes Incorporated (BHI - Analyst Report) just declared a dividend of 15 cents per share, a 15% increase from the prior quarterly dividend of 13 cents. The company is yielding 0.6%, which is an appealing industry yield as most of the companies within BHI’s industry group pay no dividends. Baker’s ROE of 25% is also above the industry average of 17%. The company recently reported second-quarter earnings of $1.36 per share, excluding a charge. The result exceeded the consensus estimate by nearly 10% and surpassed the year-prior total.

Company Description

Baker Hughes provides reservoir consulting, drilling, formation evaluation, completion and production products and services to the worldwide oil and gas industry.

Higher Income

The Zacks Rank #1 (Strong Buy) company just declared a dividend of 15 cents per share, a 15% increase from the prior quarterly dividend of 13 cents. Baker Hughes noted that the dividend is payable August 15, 2008, to holders of record August 4, 2008.

BHI is yielding 0.6%, which is an appealing industry yield as most of the companies within BHI’s industry group pay no dividends.

Strong Growth

A couple days prior to hiking the dividend, the company reported second-quarter earnings of $1.36 per share, excluding a charge. The result exceeded the consensus estimate by nearly 10% and surpassed the year-prior total. Revenue of $2,997.5 million was up 18% on a year-over-year basis.

Chad C. Deaton, Baker Hughes chairman, president, and chief executive officer said, "Activity levels improved in the United States in the quarter, particularly horizontal drilling on land, more than offsetting the seasonal sequential decline in Canada drilling activity. While the primary driver of increased rig activity in the U.S. compared to a year ago has been oil-directed drilling, we expect that our customers will increase the pace of their natural gas-directed activity in the second half of 2008, resulting in additional opportunities for Baker Hughes.”

Baker’s return on equity (ROE) of 25% is above the industry average of 17%. The company’s net margin of 14.4% is in line with the industry average.

The Street is Bullish on Estimates

Wall Street reacted positively to BHI’s solid results. Thirteen out of seven covering analysts boosted full-year 2008 earnings forecasts from $5.32 per share to $5.48 in just the past week. The most accurate projection is even higher at $5.51 per share.