Name that company

Based in Hartford, I’m a diversified company that provides high technology products and services to the aerospace and commercial building industries worldwide. My businesses include Otis Elevator, Carrier heating and cooling, UTC Fire & Security, UTC Power, Pratt & Whitney aircraft engines, Hamilton Sundstrand aerospace systems, and Sikorsky helicopters. I employ 210,000 people, 143,000 outside the U.S., and am America’s 22nd-largest manufacturer. I’ve been paying dividends on my stock since 1936, and I rake in more than $35 billion annually, more than $5 billion from the U.S. government. Who am I?

Last week’s question and answer

Based in Milwaukee, I was founded in 1885 by the inventor of the first electric room thermostat. Today I’m a “global leader in interior experience, building efficiency and power solutions.” I bought Delphi’s automotive battery business this year, and made a $3.2 billion bid for York International, a heating, ventilating, air-conditioning and refrigeration giant. I provide automotive seating and interior systems, including overhead, door, instrument panel, and electronics products. I also offer energy optimization and security enhancement for non-residential buildings. I rake in more than $25 billion per year and employ some 120,000 people. Who am I? (Answer: Johnson Controls)

Pork profits

In 1971, I bought 300 shares of Smithfield Foods for $2,800, and then in 1998 I bought another 200 shares, for $3,500, investing a total of $6,300. Since the 1970s, the stock split five times, giving me a total of 10,000 shares today, worth nearly $300,000. In spite of the fact that Smithfield Foods is a top pork processor and America’s largest hog producer, with revenues exceeding $11 billion, it is very unusual to ever read anything about this company in The Wall Street Journal or other financial papers, or to hear about it on television. – William Wilt, Brookfield, Mo.

The Fool Responds: You picked an impressive company back then. As the firm itself reports, it has “delivered a 26 percent average annual compounded rate of return to investors since 1975.” When people look for “the next Microsoft,” they often neglect to seek out quiet giants with strong long-term track records in unglamorous industries. Some of the best performers over the past decades have been Southwest Airlines, Wal-Mart, Walgreen, Countrywide Financial, Progressive, investment firm Eaton Vance, and rail transportation holding company Kansas City Southern.

Snack earnings

Snack specialist J&J Snack Foods (Nasdaq: JJSF) has been a steady performer during the past five years. Products such as Minute Maid juice bars, Icee frozen beverages and SuperPretzels have helped the company’s stock serve up a 280 percent treat over that time period. A review of J&J’s fourth-quarter earnings report suggests the good times haven’t melted yet.

Fourth-quarter revenues increased 6 percent year over year, while full fiscal-year sales were higher by 9.7 percent. The bulk of full-year revenues, 61 percent, came from the Food Service division, growing 12 percent over last year. However, excluding the growth resulting from the acquisitions of Country Home Bakers and Snackworks, organic growth in this segment was only 4 percent, compared with 9 percent organic growth in the retail supermarket segment. The restaurant division saw revenues down 29 percent, primarily because 11 pretzel stores were shut down or licensed to somebody else. Frozen treats were a source of strength, with sales of Luigi’s Real Italian Ice up 50 percent.

Despite higher energy costs, operating profit margins actually improved to 11.8 percent from 11.2 percent. The combination of steady top-line growth and improving margins helped J&J increase fourth-quarter earnings per diluted share by 10.4 percent. The stock currently sports a price-to-earnings (P/E) ratio around 20.5. This is no bargain, but it may be a reasonable price to pay for a consistent performer.

Quarterly stock checkup

How often do I need to check up on my stock holdings? – G.L., Tucson, Ariz.

Ideally, follow a firm’s developments every three months, when quarterly reports are issued. At that time, read through the report (the annual report is long, but quarterly reports are much briefer) and through past press releases, all of which you’ll often find at the company’s Web site.

With stable, long-term holdings, you can get away with checking in less often.

The condition of a young, quickly growing outfit such as Netflix is likely to fluctuate much more than that of an established blue chip such as Kellogg.

Why do companies elect to not pay dividends, and how do they try to appeal to investors with that approach? – R.C., Ohio

When companies make money, they can do several things with it: Reinvest it in the business, pay it out to shareholders as a dividend, pay down debt, or buy back shares (reducing the number of shares outstanding and making each remaining share worth more).

Some firms, such as smaller, less-established and faster-growing ones, often need all the cash they generate in order to grow. Apple Computer and Oracle still pay no dividends, while Microsoft introduced one only recently. This is OK. Dividends are very attractive because they offer relatively reliable income from your investment, and an income that tends to increase over time if the company remains healthy. But if you zero in on strong, growing firms with meager or no dividends, you can still fare well as their stock prices advance.

While some investors seek the stability of hefty dividends payers (a free trial of our “Motley Fool Income Investor” newsletter at www.incomeinvestor.fool.com will introduce you to a bunch), others seek more aggressive growers.

Foolanthropic tips on worthwhile charities

The Motley Fool has raised more than $2 million for charity during the past nine years. Our annual charity drive is under way. Please consider supporting these impressive organizations:

¢ Doctors Without Borders (888-392-0392, www.doctorswithoutborders.org) encompasses thousands of volunteer doctors, nurses, water-and-sanitation experts and other medical and nonmedical professionals. They deliver emergency medical aid to people affected by armed conflict, epidemics and natural or man-made disasters in more than 70 countries.

¢ DonorsChoose (212-239-3615, www.donorschoose.org) provides at-risk students with the books, technology and supplies they need to learn. Teachers submit requests for desperately needed resources, and donors can select the projects they fund and receive a feedback package including a report on how their gift was spent.

¢ Heifer International (800-422-0474, www.heifer.org) gives economic survival to poor families worldwide by providing livestock and training, enabling them to improve their health, educate their children and preserve their environment. Recipients give their animals’ first female offspring to other needy people, continuing a chain of self-reliance from Appalachia to Zambia.

¢ The Humane Society of Louisiana (601-876-2781, www.humanela.org) had its operations critically disrupted by hurricanes Katrina and Rita. Its donor base, shelters and volunteers are largely gone, and thousands of animals have been displaced. Its day-to-day activity involves veterinary care and reuniting pets with displaced owners.

¢ Mercy Corps (888-256-1900, www.mercycorps.org) works to alleviate poverty and oppression. Its programs in health care, education, agriculture, disaster relief and economic development reach 7 million people in 35 countries. Mercy Corps currently is providing winter shelter for Pakistan’s earthquake victims, rebuilding lives shattered in Guatemala’s mudslides, and providing Darfur’s displaced women with survival skills.

Learn more about these organizations at www.foolanthropy.com or via their information above. You also can send checks made out to any of the charities above and mail them to: Foolanthropy, c/o The Motley Fool, 123 N. Pitt St., Fourth Floor, Alexandria, VA 22314. We’ll forward the checks.