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Does UTC Reward Its Investors with Higher Returns?

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Focus on generating returns for stockholders

United Technologies Corporation (UTX) has always been focused on generating good returns for its shareholders by committing to the following:

  • delivering organic growth year-over-year
  • strong program execution
  • focused portfolio in commercial buildings and aerospace
  • disciplined capital allocation

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High stock returns and dividend payout

United Technologies Corporation (UTX) stock has generated more than 130% returns over the last decade. This is nearly double the S&P index returns during the same time period. The company’s stock price growth has been in rhythm with its EPS (earnings per share) growth.

As we saw in depth in Part 14 of this series, UTC is one of the highest dividend payers in the market. Its investors have always been rewarded with consistently growing dividends, which have grown by more than nine times in the past 20 years.

Investing in share repurchases

UTC has been following a strong share repurchase program. This helps build stock value for the company’s investors. The company invested $1,500 million in share repurchases last year. In the past 20 years, UTC has produced shareholder returns of 16.3% per year, growing its market cap from $8 billion to more than $107 billion.

Outlook for 2015

For the coming year, UTC is expected to pay dividends, as it does every year. Apart from this, it has forecast a capital expenditure of $1.7 billion, share repurchases of $3 billion, and acquisitions of approximately $1 billion in 2015. This shows that despite lower forecasts of revenue growth in the coming year, United Technologies Corporation (UTX) aims to boost its stock value for shareholders by doubling its repurchases.

UTC competes with other aerospace companies such as Honeywell International (HON), Lockheed Martin (LMT), and Rockwell Collins (COL). These companies have a 2.91%, 2.04%, and 0.40% holding, respectively, in the Vanguard Industrials ETF (VIS).

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