Zacks_Analysts' Blog : Stanley Black & Decker Ups Dividend - Analyst Blog

StanleyBlack & Decker’s (SWK) Board of Directors recently approved a 21.0% hike in the company’s quarterly dividend rate. The revised quarterly rate now stands at 41 cents per common share compared with 34 cents in the previous quarter, resulting in annual rate of $1.64 per common share. The new dividend will be paid on March 22, to shareholders as of the close of business on March 2, 2011.  

The revision reflects the company’s 44^th consecutive annual dividend increase and Stanley’s commitment to return cash to shareholders together with its strong cash generation capabilities. The last revision in July 2010 was for a 3% hike in the quarterly rate from 33 cents to 34 cents per common share.

For the fiscal year 2010, the company paid roughly $201.6 million in dividends. Cash and cash equivalents exiting the year were $1,745.4 million and normalized net cash from operating activities was roughly $1,120.9 million.

New Britain, Connecticut–based, Stanley Black & Decker manufactures tools and engineered security solutions across the globe. We believe that despite active competition in all businesses, extreme dependence on housing industry, exposure to risks associated with sourcing and manufacturing overseas, and rising integration hazards, Stanley Black & Decker has a significant long-term upside potential.

The company embarks on a growth strategy of shifting its business portfolio toward favored growth markets through acquisitions and divestitures. Moreover, it remains committed to returning 1/3 capital to shareholders over the long term.

In the near term, the company’s financial guidance for 2011 and a 21% hike in cost synergies expectation from the BDK acquisition boost our confidence. Also, low to mid single-digits organic revenue growth is expected from Stanley’s three segments. Prime competitors of the company are Danaher Corp. (DHR), Makita Corp. (MKTAY), and Snap-on Inc. (SNA).

We currently maintain an Outperform recommendation on the stock.