April 24, 2026 a 03:31 pm
AOS: Dividend Analysis - A. O. Smith Corporation
A. O. Smith Corporation, with its strong 42-year dividend history, demonstrates stability and reliability in its dividend payments. With a current dividend yield of approximately 2.19%, the company stands as a moderately attractive choice for dividend-focused investors. Its consistent payout ratio underscores its financial prudence.
📊 Overview
The overview highlights key dividend metrics that are crucial to understanding the firm's position in the market.
| Metric | Value |
|---|---|
| Sector | Industrial Manufacturing |
| Dividend yield | 2.19% |
| Current dividend per share | 1.40 USD |
| Dividend history | 42 years |
| Last cut or suspension | None |
🗣️ Dividend History
A lengthy dividend history indicates the company's commitment to returning capital to shareholders.
| Year | Dividend per Share (USD) |
|---|---|
| 2026 | 0.72 |
| 2025 | 1.38 |
| 2024 | 1.30 |
| 2023 | 1.22 |
| 2022 | 1.14 |
📈 Dividend Growth
Assessing dividend growth helps gauge the potential for rising future income.
| Time | Growth |
|---|---|
| 3 years | 6.58% |
| 5 years | 7.09% |
The average dividend growth is 7.09% over 5 years. This demonstrates moderate but steady dividend growth, suggesting potential for continued annual income increments for shareholders.
✅ Payout Ratio
Payout ratios offer insight into the sustainability of the dividend under different earnings scenarios.
| Key figure | Ratio |
|---|---|
| EPS-based | 35.83% |
| Free cash flow-based | 36.12% |
With EPS payout ratios below 40%, the dividend appears sustainable. The FCF ratio reflects prudent capital management ensuring that dividends are backed by actual cash flows.
⚠️ Cashflow & Capital Efficiency
Cashflow metrics are pivotal in evaluating the capacity to maintain or grow dividends.
| Year | 2023 | 2024 | 2025 |
|---|---|---|---|
| Free Cash Flow Yield | 4.83% | 4.73% | 5.83% |
| Earnings Yield | 4.50% | 5.32% | 5.84% |
| CAPEX to Operating Cash Flow | 10.83% | 18.56% | 11.48% |
| Stock-based Compensation to Revenue | 0.3% | 0.4% | 0.36% |
| Free Cash Flow / Operating Cash Flow Ratio | 89% | 81% | 88% |
Robust cash flows relative to earnings and promising capital efficiency ratios signal strong cash availability to sustain dividends and fund future growth.
⚠️ Balance Sheet & Leverage Analysis
A solid balance sheet supports dividend sustainability through economic cycles.
| Year | 2023 | 2024 | 2025 |
|---|---|---|---|
| Debt-to-Equity | 0.08 | 0.12 | 0.10 |
| Debt-to-Assets | 0.05 | 0.07 | 0.06 |
| Debt-to-Capital | 0.08 | 0.10 | 0.09 |
| Net Debt to EBITDA | -0.22 | -0.03 | 0.02 |
| Current Ratio | 1.59 | 1.55 | 1.50 |
| Quick Ratio | 1.06 | 0.96 | 0.94 |
| Financial Leverage | 1.74 | 1.72 | 1.69 |
The low leverage and strong coverage ratios signify manageable debt levels and liquidity, enhancing investor confidence in dividend continuity.
📉 Fundamental Strength & Profitability
Profitability indicators reflect the efficiency and productivity of the firm.
| Year | 2023 | 2024 | 2025 |
|---|---|---|---|
| Return on Equity | 30.18% | 28.33% | 29.40% |
| Return on Assets | 17.32% | 16.47% | 17.38% |
| Margins: Net | 14.45% | 13.98% | 14.26% |
| Margins: EBIT | 19.35% | 18.54% | 19.04% |
| Margins: EBITDA | 21.38% | 20.60% | 20.68% |
| Margins: Gross | 38.54% | 38.14% | 38.83% |
| Research & Development to Revenue | 2.53% | 2.66% | 0.00% |
With robust returns on equity and assets, and efficient margins, A.O. Smith's profitability metrics positively influence its ability to issue long-term dividends.
✅ Price Development
📋 Dividend Scoring System
| Criteria | Score | Score Bar |
|---|---|---|
| Dividend yield | 4 | |
| Dividend Stability | 5 | |
| Dividend growth | 3 | |
| Payout ratio | 4 | |
| Financial stability | 5 | |
| Dividend continuity | 5 | |
| Cashflow Coverage | 4 | |
| Balance Sheet Quality | 5 |
Total Score: 35/40
🔍 Rating
The A. O. Smith Corporation is a robust choice for dividend investors seeking stability and moderate growth. Its strong financial indicators, low payout ratios, and long dividend history underscore its capability to deliver consistent returns. Recommendation: Buy for steady dividend income.