Dividend Aristocrats In Focus Part 53: Praxair

Every year, we review all the Dividend Aristocrats. There were two recent additions to the Dividend Aristocrats, including industrial giant Praxair (PX).

On January 25th, Praxair increased its dividend by 5%. This marked the 25thconsecutive year of dividend growth for the company, meaning Praxair is officially the newest Dividend Aristocrat.

The Dividend Aristocrats are a select group of 53 stocks in the S&P 500, with 25+ years of consecutive dividend increases.

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In order to become a Dividend Aristocrat, a company needs a strong business model, durable competitive advantages, and the ability to withstand recessions.

Simply becoming a Dividend Aristocrat is a huge achievement. But a long history of dividend increases is not the only important investment consideration.

Praxair is a high-quality company, but the stock appears to be overvalued.

Business Overview

Praxair was incorporated in 1988, under the name Union Carbide Industrial Gases Inc. Today, it is one of the largest industrial gas companies in the world. It generates annual sales above $11 billion, and has a market capitalization of approximately $46.6 billion. Nearly half of annual revenue is derived from outside North America.

Source: Morgan Stanley Global Chemicals and AG Conference, page 3

Praxair produces, sells, and distributes atmospheric, process, and specialty gases, along with high-performance surface coatings. Gases sold primarily include acetylene, helium, nitrogen, argon, hydrogen, oxygen, carbon dioxide, and more.

The coatings business provides surface protection for equipment and materials. Surface coatings help reduce the effects of abrasion, oxidation, corrosion, erosion, wear, and extreme heat.

Customers come from a variety of industries, including aerospace, chemicals, food and beverage, electronics, energy, healthcare, manufacturing, metals, and more.