Parker Hannifin's Dividend Remains Secure Following Large Acquisition
Parker Hannifin on Monday announced plans to acquire British aerospace components maker Meggitt in a cash and debt transaction valued at more than $9 billion.
This deal will boost Parker Hannifin's revenue by over 15% and nearly double the size of its aerospace division, which will account for roughly a third of the business going forward.
While the acquisition's large size will increase Parker Hannifin's debt and result in significant integration costs, management remains committed to the dividend.
The supplier of industrial motion and control technologies said it will continue targeting a 35% payout ratio and expects to extend its streak of paying higher dividends for 65 consecutive fiscal years. The balance sheet should retain its investment grade rating, too.
As a result, we are reaffirming Parker Hannifin's Very Safe Dividend Safety Score. The company has a long history of making successful acquisitions, and this deal combines two complementary portfolios of essential products that will benefit from a commercial aerospace recovery.
This deal will boost Parker Hannifin's revenue by over 15% and nearly double the size of its aerospace division, which will account for roughly a third of the business going forward.
While the acquisition's large size will increase Parker Hannifin's debt and result in significant integration costs, management remains committed to the dividend.
The supplier of industrial motion and control technologies said it will continue targeting a 35% payout ratio and expects to extend its streak of paying higher dividends for 65 consecutive fiscal years. The balance sheet should retain its investment grade rating, too.
As a result, we are reaffirming Parker Hannifin's Very Safe Dividend Safety Score. The company has a long history of making successful acquisitions, and this deal combines two complementary portfolios of essential products that will benefit from a commercial aerospace recovery.
