A.O. Smith (AOS) Rewards Shareholders With 29% Dividend Hike
Zacks Investment Research | Jan 21, 2018 08:22PM ET
A. O. Smith Corporation (NYSE:AOS) announced a whopping 29% hike in its quarterly cash dividend. The new dividend of 18 cents per share will be paid on Feb 15 to shareholders on record as of Jan 31.
This translates to a dividend of 72 cents per share on an annualized basis. Based on the current 145.8 million shares outstanding, the new dividend will translate to a total payout of approximately $105 million.
This marks the 13th consecutive year in which the company has increased its quarterly cash dividend, which underlines the strength and resilience of A.O. Smith’s balance sheet and cash generation. The dividend hike is consistent with the five-year compound annual growth rate of the company’s dividend, which exceeds 25%.
Based on the closing price of $67.04 as of Jan 19, the increased dividend translates to a yield of 1.1%.
With long-term value creation in mind, the company has taken consistent steps to enhance its balance-sheet strength. With a solid capital and liquidity position, the company is anticipated to continue enhancing shareholder value through efficient capital-deployment activities.
Also, A.O. Smith displays strong financial leverage. Its debt/equity ratio of 0.27 compares favorably with the industry average of 0.29, indicating a lower debt burden relative to the industry. The company’s ROE of 22.4% is also much higher than the industry average of 9.7%. This reflects that it is more efficient in utilizing shareholder funds compared to its peers. Moreover, A.O. Smith has appreciated 39.8% in the last year against the 22.4% gain for its Zacks Investment Research
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