Toromont is the better industrial buy

Article Excerpt

TOROMONT INDUSTRIES LTD. $66 (Toronto symbol TIH; High-Growth Dividend Payer Portfolio; Manufacturing & Industry sector; Shares o/s: 81.3 million; Market cap: $5.4 billion; Dividend yield: 1.4%; Dividend Sustainability Rating: Above Average; www.toromont.com) distributes a broad range of industrial equipment, including machinery made by Caterpillar. It also makes refrigeration systems through its CIMCO division. The company has raised its dividend annually for the last 29 years. In April 2018, it lifted that quarterly payment by 21.1%, to $0.23 from $0.19. The new annual rate of $0.92 yields 1.4%. In October 2017, Toromont completed its acquisition of privately held Hewitt Group. Hewitt is the exclusive distributor of Caterpillar equipment in Quebec and Atlantic Canada. The purchase price was $1.02 billion—$917.7 million in cash and 2.25 million Toromont shares. Hewitt should add $1.0 billion to the company’s annual revenue. Toromont borrowed most of the cash it needed for the acquisition. That increased its long-term debt from $150.0 million (as of June 30, 2017) to $743.7 million (as of June…

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