Praxair, Inc. (NYSE:PX) Has Dividend Yield Over 2.5%

May 31, 2016

Giorgio Caputo, Portfolio Manager at First Eagle Investment Management, says Praxair Inc. (NYSE:PX) is firmly established in an industry known for good returns on capital, which is evident by the company’s dividend yield.

[Praxair] is one of our newer investments in the materials space. I think it’s a nice example of the kinds of opportunities that were available in and around the energy, commodity and emerging markets mini panics that we saw both last summer and even earlier this year.

Praxair is one of the leading global providers of industrial gases, which are used for everything from refining — for instance, by companies like CITGO — and in chemical plants to food and beverage production. This is an industry that is in excess of 100 years old, and the companies that dominate this industry have really been there since the start of that.

These are large plants, so your location and your local density is very important to your ability to earn attractive returns, and it’s been an industry that hasn’t been very kind to new entrants and second movers. So we really like that this is a consolidated, rational industry with good returns on capital.

We believe the management team is very disciplined in terms of capital allocation, and when they can’t find attractive projects that meet their return standards, they do return cash to shareholders, which is something that they’re doing right now. Praxair has a dividend yield that is a little north of 2.5%.