Thursday, March 6, 2014

Dividend Growth Investment Amec

The investment choice for February was the London listed company Amec AMEC.L - Amec was a company that I found while screening for companies with sound financial fundamentals. Upon noticing its strong balance sheet I decided to further investigate its market position, dividend history and performance.

Amec is what you 
could consider a small-cap with a market cap in the 3 billion range. It provides consulting services to the energy industry. From project engineering services, to asset management, to asset decommissioning, they basically provide all kind of infrastructure design, implementation and maintenance. Their main revenue driver at the moment is the exploration of oil and gas fields which is a very good place to be, as the oil industry is investing massively on exploration and extraction. Due to this, they have been experiencing good consistent growth in the last 10 years. 

While a lot of their business comes from Europe, they also have a strong international footprint:

Also, they are in the process of acquiring the similar Swiss company Foster Wheeler (FWLT). Foster Wheeler is roughly the equivalent of AMEC but for downstream operations, meaning that by acquiring Foster Wheeler, AMEC will be able to offer services across the whole range of the oil and gas industry. Additionally, Foster Wheeler has a strong presence in regions where AMEC has weak business, providing great expansion synergy. While this will add some debt to the balance sheet, they will finance most of the acquisition through new AMEC stock. 

Dividend Yield: 3.7%
Dividend Raise Streak: 9 Years
Dividend Payment Streak: 9 Years
Typical Yearly Dividend Growth: 15%

I am pretty excited with finding a company this size with such stable financials and such good dividend track record, I will be watching closely so that I can add to my position in the future.

For the investors in the USA interested in this company, you will be happy to hear that after acquiring Foster Wheeler, AMEC will be listed in the NYSE in the form of ADRs.

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