Honeywell Guidance and the Conglomerate Dividend Chase (HON, GE, MMM, UTX)

Honeywell International Inc. (NYSE: HON) made our top day trader alerts this morning after the firm raised its guidance.  The company reported that earnings will be on April 23, 2010, but it raised its prior guidance of $0.40 to $0.45 EPS to $0.45 to $0.49 EPS.  Thomson Reuters had estimates of $0.44 EPS.  But what is interesting is that this opens the door to a dividend hike.

On February 11, 2010, Honeywell announced that it had declared a regular quarterly dividend of $0.3025 per share, payable on March 10, 2010 to share owners of record at the close of business on February 19, 2010.  That marked the fifth straight quarter at the same dividend payout, but it had previously raised its dividend every year since 2005.  There is a reason to believe that Honeywell may decide to raise its dividend in the next month.  Honeywell’s annual meeting is set for April 26, 2010 in Morris Township, NJ.  If this occurs, General Electric Co. (NYSE: GE) may have to follow suit sooner rather than later, particularly after we have seen the dividend hikes from 3M Co. (NYSE: MMM) and United Technologies Corp. (NYSE: UTX).

This leaves more room for dividend upside at Honeywell, but we would caution that the historical 10% or so dividend rise each year might not be in the works.  It is possible, but we do not want to set expectations too high for shareholders.  The new-normal and the new regulatory and tax environment will probably force companies to be nimble rather than generous.

As far as General Electric Co. (NYSE: GE), it has earnings set for April 16, 2010 and it hosts its 2010 Annual Meeting of Shareowners to be held on Wednesday, April 28, in Houston, Texas.  The company has telegraphed that its dividend raising will come in 2011, although we would expect decent odds that a dividend hike could be announced at the annual shareholder meeting if its earnings beat expectations.

3M Co. (NYSE: MMM) raised its quarterly payout to $0.525 for the first quarter, up from the prior rate of $0.51 per quarter; that was its 374th consecutive quarterly dividend and was the 52nd year of dividend hikes.

United Technologies Corp. (NYSE: UTX) also hiked its dividend earlier this year, Its February payout in dividends grew by about 10% to $0.425 per share.

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JON C. OGG