Keeping Cool With HVAC Dividend Stocks

Continuing down the HVAC vent we come across one of my long time holdings, Ingersoll-Rand Plc (IR). Founded in 1872, IR just announced a monster dividend raise of 25.0%. How’s that for an annual dividend growth rate? Yielding a more acceptable 2.43%, IR sports a moderately low payout ratio of 31.3%. This stock has been with me since I became a dividend growth investor back in 2007 and has been one of my top performers along with its spin off several years back of Allegion Plc (ALLE). Like the other companies mentioned, IR offers various HVAC equipment and support for mostly non-residential clients and offers its products under the American Standard, ARO, Club Car, Nexia, Thermo King, and Trane brand names. With a decent current yield, IR also sports an impressive ten year annualized dividend growth rate of 9.80%. I expect that number to rise should IR continue making serious double digit annual dividend increases. With a current PE of 12.2, IR is trading well below its five year average PE of 21.8.

Next, is another long time holding of mine, Johnson Controls International plc (JCI). Founded in 1885, JCI recently completed a merger with Tyco International plc (TYC) combining the two industrial companies while jettisoning one of its core segments (automotive interiors) as a spin off (Adient (ADNT)) set to occur on October 31. With a current yield of 1.95% and a moderate payout ratio 65.1% JCI can continue its dividend distribution based on current cash flows and with a five year annualized dividend growth rate of 14.46% should continue to pay ever increasing passive income to shareholders for years to come. For those looking to invest in alternative fuels, particularly the lithium and lead acid battery markets, JCI may be a diversified fit for your portfolio. JCI currently trades at a PE of 34.9.

Finally, a name that really needs no introduction as it’s already quite popular among many of our fellow dividend bloggers, United Technologies Corporation (UTX). Founded in 1934, this diversified industrial company operates many segments including UTC Climate which offers HVAC solutions for residential, commercial, industrial, and transportation applications. With a decent current yield of2.65% and a moderate payout ratio of 40.1%, UTX has the cushion required to keep paying out a dividend as well as continue to raise it. As with all the other names mentioned, UTX also sports an impressive ten year dividend growth of 11.27%. With a current PE of 22.1, UTX is trading above its five year average PE of 16.3. Forward PE looks more enticing at 14.5. Of course, a four star rating from Morningstar doesn’t hurt either.

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Disclosure: Long IR, ALLE, JCI

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