Global large-cap energy equipment maker National Oilwell Varco Inc. (NOV - Analyst Report) has increased its quarterly common stock dividend by a penny to 13 cents per share. The new dividend will be paid on December 21, 2012 to shareholders of record as of December 7.
The strength of National Oilwell’s business model reflects the company’s commitment toward returning value to shareholders with its strong cash generation capabilities. Prior to this revision, the company had increased its quarterly dividend by a penny in November 2011.
As on September 30, 2012, the company had $1,702.0 million in cash and a debt of $1,529.0 million. The debt-to-capitalization ratio stood at approximately 7.2%.
Moreover, it has paid common stock dividends amounting to $153.0 million to shareholders up to third quarter of 2012.
We believe that the increase in dividend will boost investor confidence in the stock, thereby driving share value.
Houston, Texas-based National Oilwell Varco, Inc., formerly National Oilwell, is a world leader in the design, manufacture, and sale of comprehensive systems, components, products, and equipment used in oil and gas drilling and production worldwide.
The company is one of the biggest manufacturers of drilling equipment in the world with an impressive business model. The company’s large installed base of rigs worldwide provides for a steady recurring revenue stream through demand for maintenance, parts and other expendable products
However, National Oilwell Varco conducts operations in many countries, with a major portion of its total revenue coming from international markets. As such, the company is exposed to risks associated with doing business abroad. Such risks include embargoes and/or expropriation of assets, exchange rate risks, terrorism and political/civil sentiment, and others.
National Oilwell Varco, which ranks ahead of Cameron International Corp. as the biggest U.S. maker of oilfield equipment, is currently a Zacks #3 Rank (Hold) stock, implying that it is expected to perform in line with the broader U.S. equity market over the next one to three months. We are also maintaining our long-term Neutral recommendation on the stock