Industrial goods manufacturer Graco Inc. (GGG) recently announced a 9% year-over-year hike in its quarterly dividend payout to 30 cents per share or $1.20 on an annualized basis. The increased dividend will be payable on Feb 4, 2015 to shareholders of record as of Jan 20.
Based on the closing price of $80.90 on Dec 5, 2014, the proposed dividend affirms a yield of 1.5%. A steady dividend payout is part of the long-term strategy of Graco to provide attractive risk-adjusted returns to its stockholders. In addition, healthy dividend increases at periodic intervals have been one of Graco’s strong points. The current dividend increase is the 11th such instance for the company since 2005.
The dividend increase comes close on the heels of strong third-quarter 2014 results, wherein Graco reported substantial year-over-year improvements in revenue and earnings on the back of continued operational momentum. Graco reported record quarterly sales with growth in all regions and segments. Net sales in the reported quarter improved 9.2% year over year to $302.6 million.
The strongest performing region was the Americas, driven by double-digit organic sales growth in the Contractor and Lubrication segments. In Asia Pacific, double-digit quarterly sales growth was witnessed in the Industrial segment, while organic growth in the EMEA region (Europe, Middle East and Africa) was slightly low in the low single digits due to softening macroeconomic conditions in the region and geopolitical concerns.
Net income for the reported quarter increased to $59.6 million or 97 cents per share from $56.1 million or 89 cents in the year-ago quarter. Moving forward, Graco expects mid-single digit organic growth in the fourth quarter with accretive acquisitions. At the same time, management remains bullish on the U.S. housing market and the economy as a whole.
The company also anticipates continuing its healthy momentum in top-line growth through the recent acquisition of Alco Valves Group – an U.K. based manufacturer of high quality, high pressure valves for the oil and natural gas industry. With Alco Valves on board, the company expects to leverage its core competencies of designing and manufacturing advanced flow control technologies to gain further mileage in the oil and gas industry.
Graco currently has a Zacks Rank #3 (Hold). Other stocks that look promising and are worth a look now include EnPro Industries, Inc. (NPO), Parker-Hannifin Corporation (PH) and Middleby Corp (MIDD), each carrying a Zacks Rank #2 (Buy).
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