L-3 Communications Boosts Dividend

L-3 Communications Holdings Inc. (LLL - Analyst Report) has increased its quarterly dividend by 11%, bringing the annualized dividend to $2.00 per share from the previous payout of $1.80 per share. The company focuses on program execution, operational efficiency and disciplined cash deployment which make incremental dividend payouts feasible lending increasing value to shareholders.

Following the hike, the company will now pay a quarterly dividend of 50 cents compared to its previous payout of 45 cents per share. The said dividend will be paid on March 15, 2012, to shareholders of record as of the close of business on March 1, 2012.

The company follows a long-term strategy of delivering returns to its shareholders. It has been able to increase its dividend for the seventh consecutive year. Last February, the company had increased its quarterly dividend by 12.5% to 45 cents per share. Despite the challenging environment, the company seems confident of posting solid performance.

Recently, L-3 Communications reported fourth quarter and fiscal 2011 earnings results. At its earnings call, the company had indicated that it will continue to focus on adding new capabilities that expand product lines and customer base. Recently, it has completed the pending acquisition of the Kollmorgen Electro-Optical (“KEO”) unit of Danaher Corporation for $210 million, subject to certain contractual adjustments to the purchase price. The business will run under the name of L-3 KEO.

The company clocked quarterly pro forma earnings per share of $2.44, easily surpassing the Zacks Consensus Estimate of $2.41 and the year-ago figure of $2.37. During fiscal 2011, L-3 Communications generated net cash of $1.5 billion from operating activities, up $23 million from cash generated in the year-ago period. As of December 31, 2011, cash and cash equivalents were $764 million versus $607 million at the end of December 31, 2010.

L-3 Communications is a leading supplier of a broad range of products and services used in a number of aerospace and defense platforms. It has prominent position as sub-contractor/supplier to other defense primes. However, its contracts expire faster than its peers as they are short cycle in nature. Also in the near term, the company is witnessing lower sales while higher competition has resulted in margin headwinds through re-competitions of existing businesses. The company presently retains a short-term Zacks #3 Rank (Hold). We have a long-term under perform recommendation on the stock.

Some of its main competitors are Lockheed Martin Corporation (LMT - Analyst Report) and Raytheon Company (RTN - Analyst Report).

Read the full analyst report on RTN

Read the full analyst report on LLL

Read the full analyst report on LMT