UTC is a global technology corporation with a long history of
pioneering innovation in aerospace, aviation, helicopter design,
climate control, elevator design and hydrogen fuel cells. All of
UTC's businesses have access to each other's ideas and
technologies, which promotes technological creativity throughout
the corporation and helps explain how we always seem to do next
As well as long-term commercial success, UTC also sees the
environment as a priority.
We are steadily reducing our impact on the environment with
cleaner industrial processes, while continuously improving energy
efficiency both in our products and in the way we build them.
[Source: Company Website]
Reasons to Invest:
When it comes to finding companies that offer dividend reinvestment
plans, one may come to find out that it is not that difficult.
The fact is, numerous companies do offer drips and because of
this narrowing down the search of which companies look like top
prospects for profits - as opposed to say just randomly picking a
ticker that sounds interesting - can be very time consuming and
tedious. We here at DripAdvisor.com spend monotonous hours
researching the ticks that look like they have the most potential
for a bullish move. Of course as many traders know - whether
veteran or rookie - the market is a tricky force to reckon with.
After all, if Nostradamus couldn't predict a bull market from a
bear market, then who are we to say that we know which direction
a stock is going to move. What we try and do is research the
facts, the stats, and the price action over a course of time. We
always read the news (press releases) and look into what brokers
are recommending for that given company. We also focus on what
the sectors or industries are doing. We are more than likely not
going to recommend a company that is in a sector on a long-term
bearish trend. The Drip of the Week for this week is no
Once again we like the aerospace and defense sector (DFI.X).
This sector has been in an upward trend for nearly four months
now, moving more than 130 points. Traders are safe to assume
that this sounds like the aerospace sector is a bit overextended
but the fact is all of the sectors appear to be like this. If
one was to look at the aerospace sector's chart, they might
notice a trend of sideways action. Since the middle of this past
March the aerospace sector has moved sideways for about two
weeks, then had a slight drop, which was followed by an
impressive gap up. Then again, two weeks of sideways action,
slight drop and a gap up. Low and behold we are in the third
revolution of this cycle. Because this sector is overextended,
we would expect a slight sell off in the near future, dropping
aerospace stocks a little and giving bulls time to take profits.
This gives traders a chance to buy in at a lower cost and
hopefully catch the gap up.
Among the many companies that are listed in the aerospace and
defense sector is United Technologies Corporation (NYSE:UTX).
Based on their market capitalization ($33.6B) this is the number
one company in the aerospace sector. United Technologies Corp
has four operating segments: Carrier - heating, ventilating and
air conditioning systems, Flight Systems - helicopters electrical
systems, Otis - elevators and escalators, Pratt and Whitney -
aircraft engines and space propulsion. UTX's first quarter
results were impressive to say the least. Revenues rose 5% to
$6.7 billion and net income applicable to common rose 8% to $494
million. These results were said to be a reflection of high
revenue growth at Otis as well as higher military aerospace
revenues and improved margins.
On June 18th United Technologies hit a new 52-week high of
$74.07. This is good news considering that they are set to
announce earnings July 17th. The company is estimating earnings
of 1.23 for the second quarter. Keep in mind their first quarter
estimate was 0.97, which they beat with actual earnings reading
1.00. The surprise percentage of beating earnings in the first
quarter was 3.1%. Traders should also note that UTX has beat
earnings estimates for the last four quarters and after reaching
their new 52-week high last month, they could be in to beat
earnings this quarter as well. UTX expects a 4.1% earning growth
next quarter. When you compare this to the expected earnings
growth of the industry (-12.1%) one cannot help but see UTX in
the aerospace and defense industry's limelight.
DRIP investors should also note that on September 10th, 2003
United Technologies is set for a dividend payment of $0.27.
UTX's annual dividend is $1.08 and the company currently yields a
1.50% dividend to its shareholders.
In respects to growth rate estimates UTX expects sales
percentages to increase to 1.13 over the next year, 5.35 over the
next three years and 5.79 over the next 5 years. EPS percentages
are 15.41 over the next year and 38.87 over the next three years.
Dividend percentages are expected to be at 8.89 over the next
year, 8.84 over the next three years and 9.59 over the next five
years. This dividend increase over the five-year period is
something that DRIP investors should take into consideration. If
the dividend percentage increases so do profits, especially for
those that are invested in the company's dividend.
In the News
Perhaps the biggest news for UTX is that the Federal Trade
Commission sees no antitrust problems with United Technologies
Corp.'s plan to buy Chubb PLC. Wednesday July 2nd, the commission
said that they have not found any problems with the deal as it
was structured and has cleared UTX of the waiting period required
under the Hart-Scott-Rodino Antitrust Improvements Act.
United Technologies Corporation announced on June 26th, 2003,
that they have signed an agreement with Hyundai to jointly
develop a new automotive fuel cell power plant capable of
operation in freezing conditions. This is one of the main
problems with fuel cell operated automobiles and should prove to
be an excellent and innovative advancement in the automobile
industry. These vehicles should be ready to lease by fleet
operators in 2004.
UTX also announced on June 18th, that its Otis segment has
acquired a contract to install 111 elevators and escalators in
Asia's largest mall. The mall is being built in Guangzhou, which
is in the commercial hub of South China. This mall soon to be
known as Grand View Mall will be the largest mall in Asia
catering to shopping, residential areas, offices and
entertainment. This contract is huge for UTX's profit margin as
it guarantees work for Otis for quite some time to come.
Until Next Week,
Strong Buy: 6
Strong Sell: 0
Shares to Qualify = 10
Auto-reinvestment = No
Accept Foreign Accounts: Yes
Temper Enrollment: Yes
Min/Max Investment = $100 to $120,000/year
Reinvestment Fees -
Dividend investment fees: None
Cash investment fees: None
Auto reinvestment fees: None Available
First Chicago Trust
United Technologies Building
One Financial Plaza
Hartford, CT 06103
Phone: (860) 728-7000
Fax: (860) 728-7028