Is Air Products & Chemicals, Inc. (APD) a Buy?

In addition, Air Products has a dividend track record that is hard to beat. The company recently raised its dividend by 11%, representing the 31^st consecutive year of a dividend increase. The new annual dividend of $2.84 per share amounts to a nearly 3% yield at recent prices.

On the other hand, Airgas, Inc (NYSE:ARG) pays a miniscule dividend of just 1.9% and Alcoa Inc (NYSE:AA)’s dividend troubles are well-known to many. Alcoa cut its shareholder payout by more than 80% during the recession and hasn’t raised it since. At current prices, Alcoa Inc (NYSE:AA) yields just 1.4%.

The Foolish takeaway

Air Products provides reliable annual dividend increases in the high-single digit to low-double digit percentages. Over the past five years, the company has increased its shareholder payout by 10% compounded annually. It seems that year in and year out, no matter how challenging the prevailing economic climate, Air Products comes through with a 10% dividend increase.

Airgas, Inc (NYSE:ARG) is a profitable company that does pay a dividend, but its yield is 100 basis points lower than what you can secure with Air Products. Moreover, Airgas is more richly valued than Air Products, meaning new investors are getting a thinner margin of safety.

Because Air Products is so committed to maintaining its streak of dividend increases and trades reasonably as compared to where the market trades, I’d consider Air Products a buy, and you should consider any pull back as a solid buying opportunity.

The article Is Air Products a Buy? originally appeared on Fool.com and is written by Robert Ciura.

Robert Ciura has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Robert is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

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