August 03, 2025 a 03:32 am
AJG: Dividend Analysis - Arthur J. Gallagher & Co.
Arthur J. Gallagher & Co. (AJG) presents a strong profile with a consistent dividend history over 41 years, denoting reliability and shareholder confidence. With a steady dividend growth rate and a modest payout ratio, AJG signifies potential for sustainable, long-term dividend payments. However, with a relatively low dividend yield of 0.90%, the company focuses more on growth and stability than high immediate returns.
📊 Overview
Arthur J. Gallagher & Co. operates in a resilient sector, focusing on stability and growth. The dividend yield currently stands at 0.90%, with a current dividend per share of 2.38 USD, demonstrating consistency across more than four decades.
| Key Metrics | Values |
|---|---|
| Sector | Insurance Brokerage |
| Dividend yield | 0.90% |
| Current dividend per share | 2.38 USD |
| Dividend history | 41 years |
| Last cut or suspension | None |
🗣️ Dividend History
The impressive dividend history over 41 years is a testament to AJG's financial robustness and strategic foresight. This uninterrupted dividend distribution reflects the company's commitment to providing consistent returns to its shareholders.
| Year | Dividend Per Share (USD) |
|---|---|
| 2025 | 1.95 |
| 2024 | 2.40 |
| 2023 | 2.20 |
| 2022 | 2.04 |
| 2021 | 1.92 |
📈 Dividend Growth
AJG's dividend growth over the last 3 and 5 years has been moderate, indicating a balanced approach between rewarding shareholders and retaining earnings for growth. The consistent increase underlines the company's growth potential and financial health.
| Time | Growth |
|---|---|
| 3 years | 7.72% |
| 5 years | 6.89% |
The average dividend growth is 6.89% over 5 years. This shows moderate but steady dividend growth.
✅ Payout Ratio
A lower payout ratio generally allows room for future dividend increases, as it indicates the dividend is well covered by earnings.
| Key figure | Ratio |
|---|---|
| EPS-based | 38.95% |
| Free cash flow-based | 24.17% |
With an EPS-based payout ratio of 38.95% and an FCF-based payout ratio of 24.17%, AJG maintains a healthy buffer for meeting its dividend obligations, suggesting strong reinvestment in business growth and stability.
⚖️ Cashflow & Capital Efficiency
Analyzing cash flows and capital efficiency is vital to understanding how effectively a company generates and uses cash. AJG's metrics convey solid operational efficiency and robust cash management.
| Year | 2022 | 2023 | 2024 |
|---|---|---|---|
| Free Cash Flow Yield | 4.90% | 3.80% | 3.90% |
| Earnings Yield | 2.81% | 2.00% | 2.34% |
| CAPEX to Operating Cash Flow | 5.27% | 9.53% | 5.49% |
| Stock-based Compensation to Revenue | 0.29% | 0.31% | 0.36% |
| Free Cash Flow / Operating Cash Flow Ratio | 91.40% | 90.47% | 94.51% |
Solid cash flow generation is evidenced by a healthy free cash flow yield and effective CAPEX management. These metrics reflect strong operational performance and efficient use of capital.
🏦 Balance Sheet & Leverage Analysis
Evaluating the balance sheet strength and leverage gives insight into financial stability and risk exposure. AJG's debt ratios reflect manageable leverage levels, contributing to a solid credit profile.
| Year | 2022 | 2023 | 2024 |
|---|---|---|---|
| Debt-to-Equity | 0.70 | 0.77 | 0.67 |
| Debt-to-Assets | 0.16 | 0.16 | 0.21 |
| Debt-to-Capital | 0.41 | 0.44 | 0.40 |
| Net Debt to EBITDA | 2.78 | 3.37 | -0.48 |
| Current Ratio | 1.04 | 1.03 | 1.36 |
| Quick Ratio | 0.83 | 1.03 | 1.51 |
| Financial Leverage | 4.26 | 4.79 | 3.18 |
AJG's optimal debt management is evident in the leverage ratios. With a current ratio consistently above 1, AJG shows a comfortable ability to meet short-term obligations.
📈 Fundamental Strength & Profitability
The fundamental strength and profitability metrics provide insights into the intrinsic value and financial health of AJG. A strong ROE and gross margins are indicative of a well-managed enterprise with good profitability.
| Year | 2022 | 2023 | 2024 |
|---|---|---|---|
| Return on Equity | 12.19% | 9.00% | 7.25% |
| Return on Assets | 2.86% | 1.88% | 2.28% |
| Margins: Net Profit | 13.03% | 9.63% | 12.66% |
| EBIT Margin | 18.52% | 14.71% | 19.52% |
| EBITDA Margin | 25.54% | 21.63% | 27.04% |
| Gross Margin | 42.07% | 42.15% | 84.82% |
The healthy Return on Equity and strong margin percentages illustrate AJG's efficient use of equity and ability to generate profit.
📊 Price Development
🗂️ Dividend Scoring System
| Category | Description | Score |
|---|---|---|
| Dividend yield | Measures immediate return on investment via dividends. | |
| Dividend Stability | Consistency in dividend issuance. | |
| Dividend growth | Rate of increase in dividend payments. | |
| Payout ratio | Shows how well earnings cover dividend payments. | |
| Financial stability | Overall health of the company's finances. | |
| Dividend continuity | Uninterrupted dividend payments over the years. | |
| Cashflow Coverage | Ability to cover dividend with cash flow. | |
| Balance Sheet Quality | Measure of financial structure and leverage. |
Total Score: 36/40
🧐 Rating
Arthur J. Gallagher & Co. has a robust dividend profile with impressive stability, moderate growth, and a conservative payout ratio. The company is recommended for investors seeking stable dividend income with an appetite for capital appreciation potential over time due to strong fundamentals and sound financial management.