Security and protection services provider The ADT Corporation (ADT) recently announced a 60% year-over-year hike to its dividend payout. The quarterly dividend now comes to 20 cents or 80 cents per share on an annualized basis. The increased cash dividend is payable on Feb 19 to shareholders of record as of Jan 29.
Based on the closing price of $39.08 on Jan 10, 2014, the proposed dividend translates into a yield of 2.0%. A steady dividend payout is part of the long-term strategy of ADT to provide attractive risk-adjusted returns to its stockholders. The company has paid a steady dividend ever since its inception as a standalone listed firm in Oct 2012.
Headquartered in Boca Raton, Fla, ADT offers electronic security products along with a wide range of interactive home and business automation and monitoring services for residences and small businesses in the U.S. and Canada.
ADT’s electronic security and home/business automation solutions primarily include installation and monitoring of residential and small business security and premises automation systems. These products are designed to detect intrusion; control access; react to movement, smoke, carbon monoxide, flooding, temperature and other environmental conditions and hazards; and address personal emergencies, such as, injuries, medical emergencies or incapacitation.
ADT has a single operating segment. The products and services of the company comprise ADT Pulse interactive home and business solutions, home health services, and monitoring center supported personal emergency response system products and services. The company also provides technical services for the maintenance and installation of upgraded or additional equipment. ADT delivers an integrated customer experience by maintaining the industry's largest sales, installation and service field force along with a robust monitoring network.
Moving forward, ADT expects to grow its core business by increasing operating efficiency and providing risk-adjusted returns to its shareholders. In fiscal 2014, total revenue growth is expected to be in the range of 4%–5%. EBITDA margin before special items is expected to improve 150 basis points over a three-year period with a 50 basis point improvement in fiscal 2014. Free cash flow before special items is expected to be in the range of 5%–10%.
ADT currently carries a Zacks Rank #2 (Buy). Other stocks that are worth considering in the industry include Nielsen Holdings N.V. (NLSN), Verisk Analytics, Inc. (VRSK) and McGraw Hill Financial, Inc. (MHFI), each carrying a Zacks Rank #2 (Buy).
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