The industrial gas company Air Products & Chemicals Inc. (APD) increased its quarterly dividend by 18%. The revised quarterly dividend now stands at 58 cents per share compared with the previous value of 49 cents per share. The revised dividend will be payable on May 9, 2011 to shareholders as of the close of business on April 1, 2011. This also represents the 29th consecutive year that Air Products has increased its dividend payment.
This represents the strength of Air Product’s business model, reflecting the company’s commitment to returning value to shareholders with its strong cash generation capabilities.
In addition to this, the company also repurchased shares worth $350 million since December 31, 2010 as part of its previous share repurchase program.
Last month, Air Products dropped its year-long bid to pay $70 per share to acquire Airgas Inc. (ARG).
In January 2011, the company reported its first quarter of 2011 earnings of $1.35 per share versus $1.19 per share in the year-ago period, beating the Zacks Consensus Estimate of $1.34 per share by a penny. Revenues leaped 10% year over year to about $2.4 million on higher volumes across all business segments due to new contract wins and were above the Zacks Consensus Estimate of $2.34 billion.
The company guided to achieving a double-digit earnings growth, improved return on capital and an operating margin of 17% in 2011.
Based in Pennsylvania, Air Products is benefiting from a long-term take-or-pay contract, a consolidated industry structure, a diverse customer base and sustained pricing power. Air Products’ aggressive cost cutting and productivity initiatives, combined with its portfolio realignment efforts, have helped mitigate fixed cost headwinds, which is very encouraging.
Air Products is bogged down in significant debt. The company expects to continue raising debt in an effort to fund new projects and refinance maturing debt.
AIR PRODS & CHE (APD): Free Stock Analysis Report
AIRGAS INC (ARG): Free Stock Analysis Report
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