Shares of Pall Corporation (PLL) remained flat even after the company announced a quarterly dividend hike of 0.03 cents to 0.305 cents per share, on Oct 9. This translates into an 11% increase from the previous dividend. This increase implies a dividend yield of 1.50% on an annualized basis.
The raised dividend will be paid on Nov 10, 2014, to stockholders of record as of Oct 20, 2014. Prior to this announcement, Pall Corp. had been paying a quarterly dividend of 0.275 cents per share.
Pall’s business model strength is reflected in its strong cash generation capabilities and commitment to return value to shareholders. We believe that the consistent dividend hikes will inspire investors’ loyalty.
Pall’s strong balance sheet and cash flow provide financial flexibility in matters of incremental dividend, share repurchases and strategic acquisitions. In fiscal 2014, the company spent $250 million on share repurchases and $118.8 million on cash dividends.
While cash and cash equivalents totaled $964.1 million at year-end, Pall exited the quarter with $375.8 million long-term debt and a debt to capital ratio of 16.5%. We are encouraged by Pall’ cash strength and its ability to service long-term debts.
Pall Corp. is a leading supplier of fine filters, and other fluid clarification and separations equipment. The company’s fourth-quarter earnings improved year over year and also surpassed expectations. Revenues for the quarter were up 11.6% year over year and exceeded the Zacks Consensus Estimate as well.
Pall’s growth prospects are being driven by its superior technology, reliable global distribution, high share in market niches – should drive earnings over the long term. The regular dividend increases also indicate that the company is confident of generating steady cash flow.
Pall currently has a Zacks Rank #3 (Hold). Some better performing stocks in the sector include Advanced Emissions Solutions, Inc. (ADES), CECO Environmental Corp. (CECE) and Sharps Compliance Corp. (SMED). All three carry a Zacks Rank #2 (Buy).
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