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Allegion's Board Okays 19% Dividend Hike, $800M Share Buyback

Allegion plc ALLE announced twin rewards for its shareholders in the form of share buyback authorization and a hike in its quarterly dividend rate. These rewards were approved by its board of directors.

We believe that such disbursements vouch for Allegion’s shareholder-friendly policies and a strong cash position.

Details of Share Buyback & Quarterly Dividend

Under the new buyback program, Allegion is allowed to repurchase up to $800 million worth shares. Notably, the company’s new buyback plan replaces the one that was authorized by its board in 2017.

Additionally, the company announced 19% or 5 cents per share rise in the quarterly dividend rate, which now increased from 27 cents to 32 cents. On an annualized basis, the dividend raised to $1.28 per share from $1.08. This increment marks the company’s 6th consecutive year of dividend raise.

Allegion will pay out the revised dividend on Mar 31, 2020 to its shareholders of record as of Mar 17.

Capital-Allocation Strategies

Allegion uses free resources to strengthen its growth prospects and reward its shareholders through share buybacks and dividend payments.

Over the last five years (2014-2018), the company’s annual dividend payments climbed from 32 cents per share to 84 cents. Also, it bought back shares worth $292.7 million during the same time frame.

In the first nine months of 2019, the company distributed dividends totalling $75.5 million and repurchased shares worth $179.7 million.

Zacks Rank, Earnings Projections and Price Performance

The company currently has a market capitalization of $12.4 billion and a Zacks Rank #3 (Hold). It is poised to gain from a strengthening electronic business, pricing actions, improved operational efficacy and shareholder-friendly policies. However, rising costs, huge debt load and forex woes are concerning.

For 2019, the company anticipates earnings per share to be $4.85-$4.90, narrowed from $4.80-$4.90 stated previously. Revenues are projected to grow 4.5-5.5% year over year. Notably, the company will release fourth-quarter 2019 results on Feb 18, 2020.

Earnings estimates for Allegion have been lowered in the past 60 days. Currently, the Zacks Consensus Estimate for the bottom line is pegged at $4.87 for 2019 and $5.34 for 2020, indicating a downward revision of 0.4% and 0.2% each from the respective 60-day-ago figures.

Allegion PLC Price and Consensus

Allegion PLC price-consensus-chart | Allegion PLC Quote

In the past three months, the stock has rallied 14.5% against the industry’s decline of 3.8%.

Stocks to Consider

Some better-ranked stocks in the industry are Intellicheck, Inc. IDN, Holdings, Inc. ALRM and Johnson Controls International plc JCI. While Intellicheck sports a Zacks Rank #1 (Strong Buy), both and Johnson Controls carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Current-year earnings estimates for Intellicheck and Johnson Controls have moved north over the past 60 days while the same for was stable. Further, the trailing four-quarter positive earnings surprise for Intellicheck, Johnson Controls and is 4.76%, 16.93% and 4.43% each, on average.

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