Understanding the Dividend Performance and Sustainability of Graco Inc (GGG, Financial)
Graco Inc (GGG) recently announced a dividend of $0.24 per share, payable on 2023-11-01, with the ex-dividend date set for 2023-10-13. As investors look forward to this upcoming payment, the spotlight also shines on the company's dividend history, yield, and growth rates. Using the data from GuruFocus, let's delve into Graco Inc's dividend performance and assess its sustainability.
Introducing Graco Inc
Graco Inc (GGG, Financial) manufactures equipment used for managing fluids, coatings, and adhesives, specializing in difficult-to-handle materials. The company's business is organized into three segments: industrial, process, and contractor. Based in Minnesota, Graco serves a wide range of end markets, including industrial, automotive, and construction. Its broad array of products includes pumps, valves, meters, sprayers, and equipment used to apply coatings, sealants, and adhesives. In 2022, the firm generated approximately $2.1 billion in sales and $573 million in operating income.
Graco Inc's Dividend History
Graco Inc (GGG, Financial) has maintained a consistent dividend payment record since 1985, with dividends currently distributed on a quarterly basis. The company has increased its dividend each year since 1998, earning it the title of a dividend aristocrat, an honor bestowed on companies that have increased their dividend each year for at least the past 25 years.
Graco Inc's Dividend Yield and Growth
As of today, Graco Inc has a 12-month trailing dividend yield of 1.21% and a 12-month forward dividend yield of 1.25%, indicating an expectation of increased dividend payments over the next 12 months.
Over the past three years, Graco Inc's annual dividend growth rate was 9.50%. This rate increased to 11.90% per year over a five-year horizon. And over the past decade, Graco Inc's annual dividends per share growth rate stands at an impressive 11.00%.
Based on Graco Inc's dividend yield and five-year growth rate, the 5-year yield on cost of Graco Inc stock as of today is approximately 2.12%.
Assessing Dividend Sustainability: Payout Ratio and Profitability
To assess the sustainability of the dividend, one needs to evaluate the company's payout ratio. The dividend payout ratio provides insights into the portion of earnings the company distributes as dividends. A lower ratio suggests that the company retains a significant part of its earnings, thereby ensuring the availability of funds for future growth and unexpected downturns. As of 2023-06-30, Graco Inc's dividend payout ratio is 0.30.
Graco Inc's profitability rank, as per GuruFocus, is 9 out of 10 as of 2023-06-30, suggesting good profitability prospects. The company has reported positive net income for each of the past ten years, further solidifying its high profitability.
The Future Outlook: Growth Metrics
For dividends to be sustainable, a company must demonstrate robust growth metrics. Graco Inc's growth rank of 9 out of 10 suggests that the company's growth trajectory is good relative to its competitors.
Revenue is the lifeblood of any company, and Graco Inc's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. Graco Inc's revenue has increased by approximately 8.90% per year on average, a rate that outperforms approximately 57.58% of global competitors.
The company's 3-year EPS growth rate showcases its capability to grow its earnings, a critical component for sustaining dividends in the long run. During the past three years, Graco Inc's earnings increased by approximately 10.00% per year on average, a rate that outperforms approximately 47.2% of global competitors.
Lastly, the company's 5-year EBITDA growth rate of 11.30% outperforms approximately 55.37% of global competitors.
Conclusion
Given Graco Inc's consistent dividend payments, impressive dividend growth rate, sustainable payout ratio, high profitability, and positive growth metrics, the company presents an attractive proposition for investors seeking steady dividends. However, as with any investment, it is crucial to conduct thorough research and consider the overall business performance and market conditions before making a decision.
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This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
