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Instant Analysis: Eaton Raises Dividend by 4%

By Eric Volkman - Feb 26, 2016 at 4:20PM

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The company will pay $0.57 per share.

What happened?
Power management specialist Eaton (ETN -0.01%) is powering up its dividend, in spite of a downturn in its businesses. The company declared a 4% raise in its quarterly payout to $0.57 per share.

Eaton is a habitual dividend payer, and it tends to increase its distribution annually around this time of the year. Over the past decade, when adjusted for stock splits, the payout has risen from $0.27 per share to the present level.


Eaton will pay its upcoming dividend on March 18, to shareholders of record as of March 7. At the current stock price, the new distribution yields just under 4%. This is well above the current 2.3% average yield of dividend paying stocks on the S&P 500 index.

Does it matter?
Eaton's business-as-usual -- albeit modest -- dividend raise should boost investor morale at least a bit. The company's been struggling, with all five of its business lines reporting revenue declines on a year-over-year basis in Q4. In total, top line slid by 9% (to just over $5 billion), while net profit fell 8% to $532 million.

2016 won't bring much relief; the company is projecting further revenue, due both to organic factors (like weakness in the mining industry, a key customer group for Eaton), and a strengthened dollar, which reduces the take from clients located abroad.

So shareholders will welcome this small piece of good news. They should also be cheered by the fact that Eaton is making a stronger push to cut costs; these should total $400 million between last year and next. That should help the company weather the tough times, positioning it to return to growth when its business environment improves.

Eric Volkman has no position in any stocks mentioned. Nor does The Motley Fool. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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Eaton Corporation plc Stock Quote
Eaton Corporation plc
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