Assessing the Sustainability and Growth of Graco Inc's Dividends
Graco Inc (GGG, Financial) recently announced a dividend of $0.26 per share, payable on 2024-02-07, with the ex-dividend date set for 2024-01-19. 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 look into Graco Inc's dividend performance and assess its sustainability.
About Graco Inc
Graco manufactures equipment used for managing fluids, coatings, and adhesives, specializing in difficult-to-handle materials. Graco's business is organized into three segments: industrial, process, and contractor. The Minnesota-based firm serves a wide range of end markets, including industrial, automotive, and construction, and its broad array of products include pumps, valves, meters, sprayers, and equipment used to apply coatings, sealants, and adhesives. The firm generated roughly $2.1 billion in sales and $573 million in operating income in 2022.
Graco Inc's Dividend Track Record
Graco Inc has maintained a consistent dividend payment record since 1985. Dividends are currently distributed on a quarterly basis. Graco Inc has increased its dividend each year since 1998. The stock is thus listed as a dividend aristocrat, an honor that is given to companies that have increased their dividend each year for at least the past 26 years. Below is a chart showing annual Dividends Per Share for tracking historical trends.
Dividend Yield and Growth Insights
As of today, Graco Inc currently has a 12-month trailing dividend yield of 1.11% and a 12-month forward dividend yield of 1.21%. This suggests 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%. Extended to a five-year horizon, this rate increased to 11.90% per year. 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 1.95%.
Evaluating Dividend Sustainability
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 2023-09-30, Graco Inc's dividend payout ratio is 0.30.
Graco Inc's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks Graco Inc's profitability 9 out of 10 as of 2023-09-30, suggesting good profitability prospects. The company has reported positive net income for each of year over the past decade, further solidifying its high profitability.
Future Growth Prospects
To ensure the sustainability of dividends, a company must have 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 56.63% 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 11.40% per year on average, a rate that outperforms approximately 50.42% of global competitors.
Lastly, the company's 5-year EBITDA growth rate of 11.60%, which outperforms approximately 58.21% of global competitors.
Concluding Remarks on Graco Inc's Dividend Profile
In conclusion, Graco Inc's track record of consistent dividend growth, combined with a sustainable payout ratio and robust profitability, presents an attractive profile for value investors. The company's solid growth metrics further reinforce the likelihood of continued dividend increases. Investors considering Graco Inc for its dividend prospects should find reassurance in these financial indicators. As the company continues to navigate the fluid management industry, its dividend policy will likely remain a cornerstone of its shareholder return strategy.
GuruFocus Premium users can screen for high-dividend yield stocks using the High Dividend Yield Screener.
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.
