UTX - United Technologies

[Vincenzo]

Anybody have any thoughts on UTX? It's taken a hit (I think due to being downgraded by an analyst). I'm tempted to take a dip.

[Dividend Watcher]

In my wife's portfolio. Low yield and bumps dividend every 5 quarters instead of 4. Payout ratio is around 60%. P/E around 17 and forward P/E around 14.5. Debt/equity around 60% (not bad for major manufacturer that just did a recent purchase of another large manufacturer -- see below). Management loaded up debt to make the purchase and spent the last couple years integrating Goodrich's operations and paying down the debt.

Bought Goodrich out a couple years ago to augment their aerospace lineup with both engine components, jet undercarriage assemblies, other aircraft assemblies and also some engineering talent. I believe some of the design and patents also applied to Sikorsky helicopters.

All that being said, consistently good growth when the business cycle is in their favor. Management is really strong and fairly conservative. They have quite a bit of defense business but they don't solely rely on that.

Stats are readily available. If you've got a long time frame, I wouldn't have a problem taking a bite out of UTX. It's #2 in wife's portfolio and we just let it reinvest. I have confidence that over the long term, management will keep growing the company and the dividend. Just remember they'll take a hit in a recession just like most manufacturers.

[earthtodan]

I bought 20 UTX as it passed below the $110 mark, which is about half a position for me. I like the urbanization theme (elevators and HVAC) even though those segments reported weak results this quarter. The Pratt & Whitney segment complements my full position in GE to round out the aerospace exposure. As far as I can tell, when Boeing and Airbus compete, I win. I don't really have an opinion on the defense sector, but I'll take it.

Also the 10 year DGR is fantastic.

[Vincenzo]

(07-29-2014, 11:19 PM)Dividend Watcher Wrote: Payout ratio is around 60%.

Dividend Watcher - where are you seeing a payout ratio of 60%? Both Morningstar and Yahoo Finance say it is 36-ish%

[Dividend Watcher]

(07-30-2014, 04:42 AM)Vincenzo Wrote:

(07-29-2014, 11:19 PM)Dividend Watcher Wrote: Payout ratio is around 60%.

Dividend Watcher - where are you seeing a payout ratio of 60%? Both Morningstar and Yahoo Finance say it is 36-ish%

You're right. I quickly went to Finviz and read the wrong line. It's around 37% -- quite low for a company that's grown the dividend around 10% for many years.

I wasn't concerned because of their debt from the Goodrich acquisition. I knew they were paying it down as quickly as they could. As you can tell, it's not one of the companies that I worry about monitoring too closely. My uncle worked for them in the Pratt & Whitney division his whole life and he always had good things to say about the company.

[Roadmap2Retire]

(07-30-2014, 09:30 AM)Dividend Watcher Wrote:

(07-30-2014, 04:42 AM)Vincenzo Wrote:

(07-29-2014, 11:19 PM)Dividend Watcher Wrote: Payout ratio is around 60%.

Dividend Watcher - where are you seeing a payout ratio of 60%? Both Morningstar and Yahoo Finance say it is 36-ish%

You're right. I quickly went to Finviz and read the wrong line. It's around 37% -- quite low for a company that's grown the dividend around 10% for many years.

I wasn't concerned because of their debt from the Goodrich acquisition. I knew they were paying it down as quickly as they could. As you can tell, it's not one of the companies that I worry about monitoring too closely. My uncle worked for them in the Pratt & Whitney division his whole life and he always had good things to say about the company.

FinViz says that the payout ratio is 60%, so you didnt look at the wrong line. A quick check of their EPS confirms that the payout is 37% - so, yahoo/morningstar are reporting the right number.