A Solid Company offering a 9% Special Dividend

TransDigm Group Incorporated (TDG) declared a special cash dividend of $12.85on each outstanding share of common stock and cash dividend equivalent payments under certain of its stock option plans. The record date for the special dividend is October 25, 2012, and the payment date for the dividend is November 5, 2012.

TDG is currently trading at $148.70 so the special dividend is an 8.64% dividend yield.  TransDigm Group does not pay a regular dividend.

TransDigm Group is a leading global designer, producer and supplier of highly engineered aircraft components for use on nearly all commercial and military aircraft in service today.  The Company is up 72% in the last year and has exceeded analysts’ earnings estimates the past 6 quarters.  EPS has increased 116% in the past year compared to the same period one year earlier.

The improved results were aided by acquisitions of Schneller, Harco and AmSafe, which increased the company’s backlog.  Commercial OEM (original equipment manufacturer) markets were major benefactors. TransDigm raised its guidance driven by the good performance in the first half of the year.  The company’s strong free cash flow and well planned capital structure creates shareholder value

W. Nicholas Howley, TransDigm Group’s Chairman and Chief Executive Officer – “With approximately $440 million of cash as of September 30, 2012, an available revolver of approximately $300 million and our strong ongoing cash generation, we feel we have adequate capital to meet our likely acquisition needs.  Additionally, given current capital market conditions, we believe we have access to significant additional capital if an attractive larger opportunity becomes available.”

Zacks Investment Research has an OUTPERFORM rating with a 12-month price target of $166.