In a bid to enhance shareholders’ value, Rockwell Automation Inc. (ROK - Analyst Report) hiked its quarterly dividend by 5 cents to 52 cents. This translates to an 11% increase from the prior dividend of 47 cents. The increased dividend will be paid on Jun 10, 2013, to stockholders of record on as of May 13, 2013.
The increased dividend will result in a dividend yield of 2.46%, up from the current yield of 2.20%. Rockwell enjoys a significant benefit on this front as its peers HollySys Automation Technologies, Ltd. (HOLI - Snapshot Report), iRobot Corporation (IRBT - Analyst Report) and ECOtality, Inc. do not pay dividends.
Rockwell Automation had previously hiked its dividend in June last year by another 11% or 4.5 cents to 47 cents. The current increase will cost the company about $28 million more annually. The hike in payout reflects the company's solid financial position and confidence in its ability to generate cash in different business cycles.
Rockwell’s cash and cash equivalent improved to 954.3 million as of Dec 31, 2012 from $903.9 million as of Sep 30, 2012. Total debt was $1.16 billion as of Dec 31, 2012, compared with $1.06 billion as of Sep 30, 2012. In the first quarter of fiscal 2013, the company generated cash flow from operating activities of $167.3 million in contrast to cash usage of $189 million in the prior-year quarter. The company deleveraged its balance sheet with its debt-to-capitalization ratio improving to 37% as of Dec 31, 2012 from 36% as of Sep 30, 2012.
Rockwell Automation will benefit from expansion in the emerging markets, investment in Logix, recent acquisition of China-based medium voltage drives business. However, uncertainty in the global economic scenario, which can lead to cautious capital-spending, further deterioration in the Chinese economy and margin headwinds in the form of increased growth spending remain concerns. The company currently retains a Zacks Rank #3 (Hold).
Based in Milwaukee, Wis., Rockwell Automation Inc. is an original equipment manufacturer of industrial automation equipment, application specific integrated software and consulting design services. The company is a leading global provider of industrial automation power, control, and information solutions.