United Technologies Makes An Attractive Dividend Stock

Last year, we added United Technologies (NYSE:UTX) to our dividend portfolio. We think the company has an attractive collection of businesses that should allow it to continue to pay a substantial and growing dividend (current yield as of this writing is 2.35%) far into the future.

The company has four business segments – Otis; UTC Climate, Controls & Security; Pratt & Whitney; and UTC Aerospace Systems. Each accounts for about a quarter of the company’s profits except Pratt & Whitney which is a bit smaller and the UTC Climate business which is a bit larger.

Each business has attractive short-term growth prospects according to management’s estimates from a recent investor presentation.

But, as dividend investors, what concerns us the most is the company’s ability to protect and grow its existing businesses over the long term. After all, a high dividend yield now is of little use if a company is under the assault of a tremendous amount of competition. Just look at the mall based retail sector. There are plenty of high dividend stocks but sales and profits are falling. What we want to focus on is the competitive position of United in each of its business segments and their long-term growth prospects.

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