Flowserve – double digit return with increasing dividends
The largest company among the three is Flowserve Corporation (NYSE:FLS), with the total market cap of $8.10 billion. At $169.90 per share, the company is valued a bit cheaper than Colfax Corp (NYSE:CFX) at 11.78 times EV/EBITDA. Flowserve is considered the global leading provider of flow control products and services for the global infrastructure industry. At the beginning of April, Flowserve reported that it has received a multi-million dollar order for the supply of pump package and energy recovery devices for the desalination plant in Cyprus. That multi-million dollar was from M.N. Larnaca Desalination, a join venture between Israeli Mekorot Development & Enterprise and Netcom Limited of Cyprus. Jim Quain, the President of Flowserve Corporation (NYSE:FLS) Engieenred Product Operations said: “Flowserve’s proven track record for efficiency and reliability of our high-pressure pumps and Calder DWEERs, along with a low overall cost of ownership and an experienced global project management team, were major considerations in being awarded this order.”
What makes me like the Flowserve is its consistent increasing dividend payment since 2007. The dividend has risen from $0.60 per share in 2007 to $1.44 per share in 2012. Interestingly, the dividend policy of Flowserve seems to be quite conservative. For the past six years, the dividend payout ratio has been quite low, fluctuating in the range of 12.9% to 16.9%. At the current trading price, the dividend yield of Flowserve stays at 1%.
My Foolish take
Among the three, I like Flowserve the most with its market leading position, reasonable valuation and double digit return on invested capital at nearly 14.90%. Moreover, Flowserve could comfortably raise its payout ratio to boost the dividend yield and increase the cash return to its shareholders.
Anh HOANG has no position in any stocks mentioned. The Motley Fool owns shares of Ampco-Pittsburgh. Anh is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.
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