To return more value to its shareholders, the board of directors of Badger Meter Inc (BMI) has authorized an increase of 14.3% in its quarterly dividend. The increased dividend of 16 cents per share is expected to be paid on September 15 to shareholders of record as on August 31. The company hiked the dividend from 14 cents a share paid on June 15, 2011.
This approval marks the company's 19th consecutive year of dividend increases. Previously, the company increased its quarterly dividend by 16.7% in August 2010. Badger Meter’s dividend yield is 1.86%, higher than that of the industry yield of 1.75% and 0.61%, the yield of Roper Industries Inc. (ROP), a peer.
Badger Meter has strong liquidity to support the dividend increase. The company ended the second quarter with cash and cash equivalents of $4.27 million and cash from operations of $12.7 million.
Badger Meter reported second-quarter income of 52 cents per share, pushing ahead of the Zacks Consensus Estimate of 46 cents. The Zacks Consensus Estimate for third-quarter 2011 is 55 cents per share. For full years 2011 and 2012, the Zacks Consensus Estimates are respectively, $1.72 per share and $2.03 per share.
Badger Meter’s AMA, AMI and AMR are higher margin-generating technologies, gradually gaining acceptance across North America and growing businesses in the long run. Also, the company possesses a well-established customer base, comprehensive product line and new ORION SE technology, which positions it well for the future.
On the flip side though, there are an adequate number of suppliers in the market, the company is dependent primarily on one for its major suppliers, exposing itself to supply-side risks.
We maintain our long-term “Neutral” recommendation on Badger Meter. The quantitative Zacks #3 Rank (short-term Neutral rating) for the company indicates no clear directional pressure on the shares over the near term.
Milwaukee, Wisconsin based, Badger Meter Inc. provides liquid flow measurement products and control technologies to utilities and industrial customers.
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