April 23, 2025 a 11:31 am
PH: Dividend Analysis - Parker-Hannifin Corporation
Parker-Hannifin Corporation demonstrates a robust and consistent dividend policy with a modest yield and strong historical growth. With over four decades of dividend increases, the company has a proven commitment to returning value to shareholders. The carefully managed payout ratio and strong fundamentals support the sustainability of its dividend strategy.
📊 Overview
Parker-Hannifin operates within the Industrial Goods sector, characterized by a variety of cyclic products that benefit from economic expansions. The company's dividend yield currently stands just under 1%, which might not be high, but its long-standing dividend history of 41 years is a testament to its resilience and shareholder focus.
| Metric | Value |
|---|---|
| Sector | Industrial Goods |
| Dividend yield | 0.95% |
| Current dividend per share | 6.09 USD |
| Dividend history | 41 years |
| Last cut or suspension | None |
📈 Dividend History
Maintaining a strong dividend payment history enhances investor trust and reflects the company’s stable cash flow. The historical performance showcases its financial health and growth capability even during economic downturns.
| Year | Dividend Per Share (USD) |
|---|---|
| 2025 | 1.63 |
| 2024 | 6.37 |
| 2023 | 5.77 |
| 2022 | 5.02 |
| 2021 | 3.97 |
📈 Dividend Growth
Robust dividend growth signals the company's ability to expand its earnings base and effectively manage its cost structure. Monitoring growth over different time periods helps assess the consistency of this trend.
| Time | Growth |
|---|---|
| 3 years | 17.07% |
| 5 years | 13.38% |
The average dividend growth is 13.38% over 5 years. This shows moderate but steady dividend growth.
⚠️ Payout Ratio
The payout ratio is crucial in determining the sustainability of dividends. A lower ratio indicates ample room for retaining profits for growth and maintaining liquidity.
| Key figure | Ratio |
|---|---|
| EPS-based | 24.81% |
| Free cash flow-based | 23.76% |
The EPS-based payout ratio of 24.81% and the FCF-based payout ratio of 23.76% reflect a conservative payout policy, promoting dividend sustainability.
✅ Cashflow & Capital Efficiency
These metrics highlight how effectively the company turns revenue into free cash flow while maintaining operational liquidity and capital efficiency.
| Metric | 2024 | 2023 | 2022 |
|---|---|---|---|
| Free Cash Flow Yield | 4.64% | 5.19% | 6.99% |
| Earnings Yield | 4.42% | 4.16% | 4.16% |
| CAPEX to Operating Cash Flow | 11.82% | 12.78% | 9.42% |
| Stock-based Compensation to Revenue | 0.78% | 0.75% | 0.86% |
| Free Cash Flow / Operating Cash Flow Ratio | 88.18% | 87.23% | 90.58% |
Parker-Hannifin's strong free cash flow yield and prudent capital expenditure ensure sustained capital efficiency.
📉 Balance Sheet & Leverage Analysis
Understanding the company's leverage and liquidity position informs about its capacity to handle debt and unforeseen financial challenges.
| Metric | 2024 | 2023 | 2022 |
|---|---|---|---|
| Debt-to-Equity | 0.87 | 1.22 | 1.30 |
| Debt-to-Assets | 0.36 | 0.42 | 0.44 |
| Debt-to-Capital | 0.47 | 0.55 | 0.56 |
| Net Debt to EBITDA | 2.02 | 2.97 | 4.48 |
| Current Ratio | 0.93 | 0.88 | 2.06 |
| Quick Ratio | 0.55 | 0.51 | 1.68 |
| Financial Leverage | 2.43 | 2.90 | 2.93 |
The company maintains a stable financial leverage and manageable debt levels, ensuring financial flexibility.
📊 Fundamental Strength & Profitability
These fundamental ratios reflect the company's efficiency in generating profits and provide insights into its operational performance.
| Metric | 2024 | 2023 | 2022 |
|---|---|---|---|
| Return on Equity | 23.56% | 20.17% | 14.87% |
| Return on Assets | 9.71% | 6.95% | 5.07% |
| Net Margin | 14.27% | 10.93% | 8.29% |
| EBIT Margin | 20.58% | 17.07% | 11.79% |
| EBITDA Margin | 25.23% | 21.36% | 15.39% |
| Gross Margin | 35.76% | 33.72% | 28.21% |
| Research & Development to Revenue | 0% | 0% | 0% |
The increased return on equity and sustained gross margins underscore Parker-Hannifin's strong operating efficiencies.
📉 Price Development
✅ Dividend Scoring System
An evaluation of Parker-Hannifin's dividends based on essential criteria highlights its strengths and potential areas of concern.
| Category | Score | Scale |
|---|---|---|
| Dividend yield | 2 | |
| Dividend Stability | 5 | |
| Dividend Growth | 4 | |
| Payout Ratio | 5 | |
| Financial Stability | 4 | |
| Dividend Continuity | 5 | |
| Cashflow Coverage | 4 | |
| Balance Sheet Quality | 4 |
Total Score: 33/40
🗣️ Rating
Parker-Hannifin Corporation provides a stable dividend offering with commendable growth, backed by strong financial metrics. While the yield may appear modest, the company's commitment to consistent dividend payments and robust growth potential makes it an attractive long-term investment for dividend-focused investors. Continued positive trends in profitability and cash flow further bolster its investment appeal.