July 01, 2025 a 02:46 am
AJG: Dividend Analysis - Arthur J. Gallagher & Co.
Arthur J. Gallagher & Co. showcases impressive dividend growth backed by solid financials. With a consistent dividend history of 41 years, the company demonstrates a commendable commitment to shareholder returns. Despite a lower dividend yield, AJG’s sustainable payout ratios ensure potential for future dividend enhancements.
📊 Overview
The following table provides an overview of Arthur J. Gallagher & Co.’s dividend specifics, emphasizing its sector performance and dividend history.
| Metric | Value |
|---|---|
| Sector | Finance |
| Dividend yield | 0.76% |
| Current dividend per share | 2.38 USD |
| Dividend history | 41 years |
| Last cut or suspension | None |
🗣️ Dividend History
With over four decades of consistent dividends, Arthur J. Gallagher & Co. reflects robust financial health and a strategic focus on stable shareholder returns.
| Year | Dividend Per Share (USD) |
|---|---|
| 2025 | 1.30 |
| 2024 | 2.40 |
| 2023 | 2.20 |
| 2022 | 2.04 |
| 2021 | 1.92 |
📈 Dividend Growth
The last few years reflect AJG's capacity to bolster dividends, with average growth rates pointing to an upward trend in shareholder returns.
| Time | Growth |
|---|---|
| 3 years | 7.72% |
| 5 years | 6.89% |
The average dividend growth is 6.89% over 5 years, indicating moderate but steady growth.
✅ Payout Ratio
Arthur J. Gallagher & Co.’s payout ratios are crucial indicators of its dividend sustainability. With a prudent approach, both EPS and FCF metrics suggest a comfortably funded payout strategy.
| Key figure ratio | Value |
|---|---|
| EPS-based | 34.61% |
| Free cash flow-based | 24.17% |
An EPS payout ratio of 34.61% and an FCF payout ratio of 24.17% reflect a conservative and maintainable dividend strategy.
💹 Cashflow & Capital Efficiency
The assessment of AJG’s cash flow and capital efficiency is pivotal for gauging its operational capabilities and future funding potential for dividends.
| Year | 2024 | 2023 | 2022 |
|---|---|---|---|
| Free Cash Flow Yield | 3.90% | 3.80% | 4.90% |
| Earnings Yield | 2.34% | 2.01% | 2.81% |
| CAPEX to Operating Cash Flow | 5.27% | 9.52% | 8.60% |
| Stock-based Compensation to Revenue | 0.36% | 0.31% | 0.29% |
| Free Cash Flow / Operating Cash Flow Ratio | 94.51% | 90.47% | 91.40% |
The cash flow figures reflect AJG’s ability to effectively reinvest for continued growth, while maintaining sufficient cash reserves for dividend disbursement.
📋 Balance Sheet & Leverage Analysis
The company’s balance sheet metrics convey its risk profile and financial resilience, important for sustaining dividends during economic downturns.
| Year | 2024 | 2023 | 2022 |
|---|---|---|---|
| Debt-to-Equity | 0.668 | 0.772 | 0.702 |
| Debt-to-Assets | 0.210 | 0.161 | 0.165 |
| Debt-to-Capital | 0.401 | 0.436 | 0.412 |
| Net Debt to EBITDA | -0.481 | 3.372 | 2.781 |
| Current Ratio | 1.507 | 1.034 | 1.043 |
| Quick Ratio | 1.508 | 1.034 | 0.832 |
| Financial Leverage | 3.184 | 4.790 | 4.255 |
AJG’s leverage ratios indicate effective debt management strategies, contributing to a stable financial footing.
🌟 Fundamental Strength & Profitability
Examining these financial health metrics gives insight into the company’s operational efficiency and profitability margins.
| Year | 2024 | 2023 | 2022 |
|---|---|---|---|
| Return on Equity | 7.25% | 8.99% | 12.19% |
| Return on Assets | 2.28% | 1.88% | 2.86% |
| Margins: Net | 12.66% | 9.63% | 13.03% |
| Margins: EBIT | 19.53% | 14.71% | 18.52% |
| Margins: EBITDA | 27.04% | 21.63% | 25.54% |
| Margins: Gross | 84.82% | 42.15% | 42.07% |
| R&D to Revenue | 0% | 0% | 0% |
The consistently strong return ratios and robust profitability margins underscore the company’s effective operational management.
📉 Price Development
📊 Dividend Scoring System
| Category | Score | Score Bar |
|---|---|---|
| Dividend yield | 2 | |
| Dividend Stability | 5 | |
| Dividend growth | 4 | |
| Payout ratio | 4 | |
| Financial stability | 4 | |
| Dividend continuity | 5 | |
| Cashflow Coverage | 4 | |
| Balance Sheet Quality | 4 |
Overall Score: 32/40
📝 Rating
The dividend profile of Arthur J. Gallagher & Co. is characterized by stability and potential for growth. With a solid historical record and strategic financial management, AJG is a dependable choice for dividend-focused investors, though current yield remains modest. Our recommendation: A prudent long-term addition for portfolios prioritizing stable, dependable dividends.