Dividend Aristocrats In Focus: United Technologies

It is not every day that a company is added to the Dividend Aristocrats. To become a member of this group, a company must increase its dividend for at least 25 consecutive years. The Dividend Aristocrats are such an exclusive group, that there were only 53 such companies with this title as of the end of 2018.

Four companies were added to the Dividend Aristocrats list in 2019, including industrial giant United Technologies (UTX).

United Technologies gave investors a 5% dividend increase last October. The stock currently yields just under 2.6%, but well above the 2% yield of the S&P 500. This article will examine if its dividend history and business performance is enough to warrant purchasing shares of the company.

Business Overview

United Technologies was founded in 1934. Today, the company has more than 200,000 employees around the world, and the stock has a market capitalization of nearly $100 billion.

United Technologies is a commercial aerospace and defense company. For the time being, United Technologies is composed of four business divisions: Pratt & Whitney, which manufactures and services engines for commercial and military customers; Otis, the world’s largest producer and servicer of elevators and escalators; UTC Climate, which produces HVAC equipment; and UTC Aerospace, which creates aerospace and industrial products.

This is a period of great change for United Technologies. After spinning offing certain businesses, United Technologies will be composed of two business divisions: Pratt & Whitney and Collins Aerospace Systems, which creates aerospace and industrial products.

The company’s $30 billion acquisition of Rockwell Collins closed on November 26th of last year.

UTX Acquisition

Source: Investor Presentation

This purchase helped to diversify United Technologies’ aerospace business as well as add approximately $8 billion in annual sales.

Separately, United Technologies announced near the end of last November that it would be spin offing certain low growth businesses in order to focus on Aerospace and Defense.  Otis, the company’s elevator and escalator business, will become an independent entity under the same name. The company’s Climate, Controls and Security businesses will take the Carrier name.

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