April 17, 2025 a 06:46 am
AOS: Dividend Analysis - A. O. Smith Corporation
The A.O. Smith Corporation reveals a strong dividend profile with consistent growth and solid historical payouts. The company's sustained dividend history extends over four decades, indicating a robust and reliable financial foundation. A favorable dividend yield above 2% combined with a strategic payout ratio underscores potential for future dividend sustainability and growth.
📊 Overview
A. O. Smith Corporation operates within the consumer goods sector, delivering a competitive dividend yield of 2.13%. With a current dividend per share valued at approximately $1.30, the company boasts a resilient dividend history, extending across 41 years with no recent cuts or suspensions.
| Metric | Value |
|---|---|
| Sector | Consumer Goods |
| Dividend Yield | 2.13% |
| Current Dividend per Share | $1.30 |
| Dividend History | 41 years |
| Last Cut/Suspension | None |
📈 Dividend History
A.O. Smith's long-standing dividend payments demonstrate a committed and investor-friendly approach, crucial for building investor trust and maintaining long-term shareholder satisfaction.
| Year | Dividend per Share (USD) |
|---|---|
| 2025 | 0.68 |
| 2024 | 1.30 |
| 2023 | 1.22 |
| 2022 | 1.14 |
| 2021 | 1.06 |
📉 Dividend Growth
The dividend growth for A.O. Smith is indicative of a strategically measured yet progressive approach. The data portrays a company focused on sustained shareholder returns over time.
| Time | Growth |
|---|---|
| 3 years | 7.04% |
| 5 years | 7.63% |
The average dividend growth is 7.63% over 5 years. This shows moderate but steady dividend growth.
🗣️ Payout Ratio
The payout ratio is a pivotal metric, demonstrating the proportion of earnings a company returns to shareholders.
| Key Figure | Ratio |
|---|---|
| EPS-based | 35.38% |
| Free Cash Flow-based | 39.24% |
With EPS payout ratio at 35.38% and FCF payout ratio at 39.24%, A.O. Smith maintains a prudent approach, ensuring enough earnings are reinvested back into the company for growth and sustainability.
✅ Cashflow & Capital Efficiency
Strong cash flow and efficient capital use are essential for sustaining dividend practices and assuring investments in growth.
| Metric | 2024 | 2023 | 2022 |
|---|---|---|---|
| Free Cash Flow Yield | 4.73% | 4.83% | 3.62% |
| Earnings Yield | 5.32% | 4.50% | 2.66% |
| CAPEX to Operating Cash Flow | 18.56% | 10.83% | 17.96% |
| Stock-based Compensation to Revenue | 0.39% | 0.30% | 0.30% |
| Free Cash Flow / Operating Cash Flow Ratio | 81.44% | 89.17% | 82.04% |
Stable cash flow and conservative capital allocation ensure that A.O. Smith is poised for sustainable growth and future capital returns.
⚠️ Balance Sheet & Leverage Analysis
Balance sheet health and leverage ratios are critical for evaluating financial stability and risk exposure.
| Metric | 2024 | 2023 | 2022 |
|---|---|---|---|
| Debt-to-Equity | 11.51% | 8.41% | 20.99% |
| Debt-to-Assets | 6.69% | 4.83% | 11.01% |
| Debt-to-Capital | 10.32% | 7.76% | 17.35% |
| Net Debt to EBITDA | -0.03 | -0.22 | -0.08 |
| Current Ratio | 1.55 | 1.59 | 1.75 |
| Quick Ratio | 0.96 | 1.06 | 1.20 |
| Financial Leverage | 1.72 | 1.74 | 1.91 |
A. O. Smith presents a healthy balance sheet with low leverage, contributing to financial flexibility and mitigated risk in variable market conditions.
📈 Fundamental Strength & Profitability
Analyzing the profitability and fundamental strength showcases the company's capacity to generate consistent earnings and sustain competitive margins.
| Metric | 2024 | 2023 | 2022 |
|---|---|---|---|
| Return on Equity | 28.33% | 30.18% | 13.49% |
| Return on Assets | 16.47% | 17.32% | 7.07% |
| Margins: Net | 13.98% | 14.45% | 6.28% |
| EBIT Margin | 18.54% | 19.35% | 6.21% |
| EBITDA Margin | 20.36% | 21.38% | 8.26% |
| Gross Margin | 38.14% | 38.54% | 35.41% |
| Research & Development to Revenue | 0% | 2.53% | 2.37% |
The robust profitability ratios highlight A.O. Smith's efficient operations, supporting ongoing dividend payments and reinforcing investor confidence.
📊 Price Development
🗣️ Dividend Scoring System
| Category | Score | Score Bar |
|---|---|---|
| Dividend yield | 4 | |
| Dividend Stability | 5 | |
| Dividend growth | 4 | |
| Payout ratio | 4 | |
| Financial stability | 5 | |
| Dividend continuity | 5 | |
| Cashflow Coverage | 4 | |
| Balance Sheet Quality | 5 |
Total Score: 36/40
🗣️ Rating
Considering A.O. Smith's robust dividend profile, financial stability, solid balance sheet metrics, and secure cash flow position, the company merits a positive evaluation. Investors can expect reliable dividends with prospects for modest growth, positioning A.O. Smith as a valuable asset in a diversified dividend portfolio.