Climate solution company, Ingersoll-Rand PLC(IR) reported on Monday that they will be splitting two of their business segments.
Following the company’s announcement to split two segments of its business into two company’s, IR reported that it will increase dividend payments by 31% from 16 cents quarterly to 21 cents quarterly. This dividend, which will equal 84 cents annually, is set to be paid on March 28 to shareholders of record on March 12. IR has an ex-dividend date of March 8 on the stock.
The company plans to split the commercial and residential security businesses in a year, which will be tax free to shareholders. With this split, the company plans to combine its residential security business with its commercial security business to establish a leading global safety and services provider.
There are high expectations for the new company, which is expected to have a strong cash flow and financial flexibility. It is expected that this new company will have opportunities to expand, with its strong margins and brand recognition.
With the split, the company will also start a share repurchase plan of $2 billion in 2013, which will continue through 2014. The plan will occur with several methods, including open market repurchases.
Ingersoll-Rand shares were up $1.41, or 2.90% during premarket trading Monday. The stock is up 62% YTD.
The Bottom Line
Shares of Ingersoll-Rand (IR) will now have a 1.73% dividend yield, based on the higher dividend payout and Friday’s closing stock price of $48.69. The stock has technical support in the $42-$44 price area. The stock is trading near the all-time high range of $50-$54 a share.
Ingersoll-Rand PLC(IR)is not recommended at this time, holding a Dividend.com DARS™ Rating of 3.4 out of 5 stars.