The board of directors of Roper Technologies, Inc. ROP recently approved a 20% increase in its quarterly dividend in a bid to share more profits with investors. The company will now pay a quarterly dividend of 30 cents per share, up from 25 cents paid on Oct 7.
The increased dividend will be paid on Jan 22, 2016 to shareholders of record as of Jan 8. Based on the closing share price of $184.60 on Dec 17, 2015, the new dividend translates to a dividend yield of 0.65%.
Though Roper has been consistently increasing its dividend for the past 23 years, the news failed to boost investors’ sentiments as the stock price decreased 0.7% on the day, possibly due to the company’s still poor dividend yield. Even after the hike, Roper’s yield is much less than the industry average of 2.36%.
Its previous dividend increase took place on Jan 7, 2015, when it was raised to 25 cents from 20 cents per share.
This recent dividend hike is supported by its robust cash balance and its ability to generate healthy cash flow, which in turn, is attributable to its strategic business model coupled with a healthy product mix. Roper had $700.6 million in cash and equivalents in the last quarter, up from $610.4 million as on Dec 31, 2014. In addition, the company’s cash from operations (for the nine-month ended Sep 30) was approximately $660 million, an increase of nearly 14% over the prior-year period. The company’s retained earnings also stood solid at $3.9 billion, increasing 11.7% in a nine-month period, reflecting its capacity to pay even higher dividends.
With approximately 101.6 million shares outstanding at the end of third quarter 2015, the company needs to dish out $122 million annually as dividend. The strong financial position will well cushion the payout.
Currently, Roper has a Zacks Rank #3 (Hold). Better-ranked stocks worth consideration in the broader tech space include Marchex, Inc. MCHX, Shopify Inc. SHOP and Zix Corporation ZIXI. All carry a Zacks Rank #2 (Buy).
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