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Honeywell's (HON) Board OKs 10% Hike in Annual Dividend Rate

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Honeywell International Inc. (HON - Free Report) , on Sep 28, has announced rewards for shareholders in form of a hike in the annual dividend rate. It is worth noting here that the company’s shares have gained 0.6%, ending the trading session at $166.40.

We believe that such shareholder-friendly policies of the company reflect a strong cash position and belief in profitability in the future.

Inside the Headlines

As revealed, Honeywell’s board of directors has approved a 10% or 30 cents per share hike in the annual dividend rate, which has now moved from $2.98 to $3.28. On a quarterly basis, the dividend increased to 82 cents from the earlier rate of 74.5 cents per share. This move marks the company’s consecutive 9th annual dividend increase of at least 10%.  

Honeywell will pay the revised quarterly dividend, for the fourth quarter of 2018, on Dec 7, to shareholders of record as of Nov 16.

Sound Capital-Allocation Strategies

Honeywell follows sound capital-allocation strategies, aiming to improve values for shareholders. It uses free resources for the development of its product line, makes acquisitions and rewards shareholders through share buybacks and dividend payments.

The company’s annual dividend payments have increased from $2.15 per share in 2015 to $2.74 in 2017, while amount invested in repurchasing shares have increased from $1,884 million in 2015 to $2,889 million in 2017.

Notably, the company paid dividends of $1,116 million to its shareholders, while purchasing $1,704 million of common shares in the first half of 2018. We believe that impressive financial performance in the quarters ahead is likely to enable the company to continue rewarding its shareholders handsomely through dividend increments.

Earnings and Price Performance of Honeywell

Honeywell, with approximately $123.6-billion market capitalization, currently carries a Zacks Rank #3 (Hold). Demand for technologically-advanced solutions as well as improved productivity and liquidity will be a boon for the company in the quarters ahead. However, prevalent headwinds in the supply chain might be deterrents.

The company is slated to release its third-quarter 2018 results on Oct 19, before the market opens. In the past 66 days, the Zacks Consensus Estimate for earnings remained stable at $1.99 for the third quarter. Over the same period, the estimates increased 0.1% to $8.15 for 2018 and decreased 1.1% to $8.76 for 2019.

Honeywell International Inc. Price and Consensus


Honeywell International Inc. Price and Consensus | Honeywell International Inc. Quote

In the past three months, the company’s share price has rallied 14.9%, outperforming 5.4% growth recorded by the industry.

Stocks to Consider

Some better-ranked stocks in the industry are Federal Signal Corporation (FSS - Free Report) , ITT Inc. (ITT - Free Report) and United Technologies Corporation (UTX - Free Report) . While Federal Signal sports a Zacks Rank #1 (Strong Buy), both ITT and United Technologies carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

In the past 60 days, earnings estimates on these three stocks improved for the current year and the next. Further, earnings surprise for the last four quarters was a positive 22.48% for Federal Signal, 6.82% for ITT and 7.31% for United Technologies.

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