AZZ Inc (AZZ) Gifts Investors With 13.3% Increase In Dividend

A provider of galvanizing services and other electrical solutions, AZZ Inc.’s (NYSE:AZZ) board of directors has approved a 13.3% increase in its quarterly dividend. The revised payout of 17 cents per share will be distributed on Nov 1, 2016 to shareholders of record at the close of business on Oct 18, 2016.

The latest hike marks an increase of 2 cents from the prior rate of 15 cents per share and it reflects management's confidence in the company’s financial profile and performance. The new annualized dividend amounts to 68 cents per share, up from 60 cents paid earlier, resulting in a dividend yield of 1.03%.

The latest dividend hike demonstrates the company’s ability to generate persistently strong cash flows, and offer solid and incremental returns to shareholders.

Joint Venture to Boost Performance

On Sep 20, AZZ formed a joint venture (JV) with Abdulrahman Ababtain Co., Ltd., to manufacture high-voltage, gas-insulated transmission line (GIL) products in the Kingdom of Saudi Arabia.

The company’s technological innovations and engineering expertise is sure to prove indispensable in the production of the GIL offering, which is aimed to cater to customers in the Middle East. The JV will give AZZ access to local markets in the region and is in sync with the company’s objective of expanding operations in international markets.

The joint venture will become operational in the first half of 2017, after finalization later this year. It will mark the inauguration of AZZ’s first dedicated facility in the country.

Our View

AZZ has been focused on global expansion. In Jul 2016, the company was awarded a contract by Sanmen Nuclear Power Company, under which it will manufacture two circuits of 550kV 3,150Amp GIL for the latter’s nuclear plant located in the Zhejiang Province of China.

In addition, proper and prudent channelization of capital resources will boost performance and facilitate shareholder-friendly initiatives, going forward.

Zacks Rank & Key Picks

AZZ currently carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the Machinery Electrical space include EnerSys (NYSE:ENS) , Schneider Electric (PA:SCHN) SE (OTC:SBGSY) and AO Smith Corp. (NYSE:AOS) . Each of these stocks carriesa Zacks Rank #2 (Buy).You can seethe complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

EnerSyshas delivered an average positive earnings surprise of 2.20% in the trailing four quarters.

Schneider Electric SE has witnessed stable revisions in its Zacks Consensus Estimate over the last 60 days for both 2016 and 2017.

AO Smith has delivered an average positive earnings surprise of 6.30% in the trailing four quarters.

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