April 28, 2025 a 02:47 am
SWK: Dividend Analysis - Stanley Black & Decker, Inc.
Stanley Black & Decker, Inc. showcases a resilient dividend profile anchored by a long history of payouts. With a current dividend yield of 5.33%, the company remains an attractive option for income-focused investors. Despite recent challenges reflected in a high EPS payout ratio, Stanley Black & Decker continues to demonstrate its commitment to rewarding shareholders over the long term.
Overview 📊
Stanley Black & Decker is positioned within the industrial sector, and with a market capitalization of approximately $9.52 billion, it has consistently proven its reliability through a formidable track record of 41 years of uninterrupted dividend history. This places the company among the elite group of Dividend Aristocrats, known for their unwavering commitment to shareholder returns.
| Key Parameters | Value |
|---|---|
| Sector | Industrial |
| Dividend yield | 5.33 % |
| Current dividend per share | 3.26 USD |
| Dividend history | 41 years |
| Last cut or suspension | None |
Dividend History 🗣️
A steady dividend history is indicative of a company's robust earnings over the years. It underscores the company's ability to generate sufficient cash flows to support dividend payments. For Stanley Black & Decker, maintaining a 41-year trajectory of stable and increasing dividends is a testament to the company's fiscal health and strategic dividend policy.
| Year | Dividend per Share (USD) |
|---|---|
| 2025 | 1.64 |
| 2024 | 3.26 |
| 2023 | 3.22 |
| 2022 | 3.18 |
| 2021 | 2.98 |
Dividend Growth 📈
The growth of dividends is a fundamental measure of a company's financial health and future prospects. Stanley Black & Decker's three-year dividend growth stands at 3.04%, whereas the five-year figure is slightly higher at 3.24%. These percentages reflect gradual, consistent increases in returns to shareholders, indicative of management's optimism about future profitability.
| Time | Growth |
|---|---|
| 3 years | 3.04 % |
| 5 years | 3.24 % |
The average dividend growth is 3.24% over 5 years. This shows moderate but steady dividend growth.
Payout Ratio 📉
The payout ratio is a crucial barometer of how sustainably a company can support dividends with its earnings. With an alarming EPS-based payout ratio of approximately 171.57%, Stanley Black & Decker's dividends are supplemented by other financial means, as earnings alone are insufficient. However, a more conservative free cash flow-based payout ratio of 66.95% suggests reliance on robust cash flow management.
| Key Figure | Ratio |
|---|---|
| EPS-based | 171.57 % |
| Free Cash Flow-based | 66.95 % |
While the EPS-based payout ratio reflects a stressed approach to dividend payments, the free cash flow metric suggests more grounded fiscal strategies, emphasizing the company's capability to maintain dividends via operation-generated cash flows.
Cashflow & Capital Efficiency 🏦
Cash flow metrics provide deep insights into a company's efficiency in utilizing resources. For instance, the free cash flow yield at 7.91% signals a solid cash flow generation capacity relative to its market value, rendering the company attractive from a cash flow standpoint. Similarly, the 31.97% CAPEX to operating cash flow ratio indicates efficient capital investment strategies.
| Metric | 2024 | 2023 | 2022 |
|---|---|---|---|
| Free Cash Flow Yield | 6.21 % | 5.80 % | -17.88 % |
| Earnings Yield | 2.43 % | -2.11 % | 1.53 % |
| CAPEX to Operating Cash Flow | 31.97 % | 28.43 % | -36.34 % |
| Stock-based Compensation to Revenue | 0.69 % | 0.53 % | 2.11 % |
| Free Cash Flow / Operating Cash Flow Ratio | 68.03 % | 71.57 % | 136.34 % |
These cash flow and capitalization strategies point towards a mixed but stabilizable cash position, with potential volatility under control moving forward.
Balance Sheet & Leverage Analysis 📊
Understanding leverage and structural liquidity is vital for assessing long-term sustainability. With a debt-to-equity ratio standing at a moderate 0.71, there is a balanced diet of debt and equity in financing operations. However, high net debt to EBITDA figures, such as 8.54 in 2023, ring cautionary notes regarding leveraged positions.
| Metric | 2024 | 2023 | 2022 |
|---|---|---|---|
| Debt-to-Equity | 0.71 | 0.81 | 0.77 |
| Debt-to-Assets | 0.29 | 0.31 | 0.30 |
| Debt-to-Capital | 0.42 | 0.45 | 0.43 |
| Net Debt to EBITDA | 4.47 | 8.54 | 7.49 |
| Current Ratio | 1.30 | 1.19 | 1.22 |
| Quick Ratio | 0.11 | 0.39 | 0.32 |
| Financial Leverage | 2.51 | 2.61 | 2.57 |
The balance sheet reflects that while debt levels warrant caution, the company displays adaptive strategies with regard to efficient liquidity, leveraging, and capital allocation.
Fundamental Strength & Profitability 📈
Profitability metrics serve as the backbone in establishing a company's financial prowess. Stanley Black & Decker exhibits modest profitability, evident from its return on equity and assets. The gradual improvement in net and EBIT margins indicates stabilization and growth potential moving forward.
| Metric | 2024 | 2023 | 2022 |
|---|---|---|---|
| Return on Equity | 3.38 % | -3.43 % | 1.75 % |
| Return on Assets | 1.35 % | -1.31 % | 0.68 % |
| Margins: Net | 1.92 % | -1.97 % | 1.00 % |
| Margins: EBIT | 4.81 % | 1.16 % | 2.22 % |
| Margins: EBITDA | 8.65 % | 5.09 % | 5.56 % |
| Margins: Gross | 29.38 % | 25.97 % | 25.28 % |
| Research & Development to Revenue | 0.00 % | 2.29 % | 2.11 % |
These statistics underscore Stanley Black & Decker's intermediate stage of profitability, with room for enhancement as it negotiates its strategic initiatives.
Price Development 📈
Dividend Scoring System ✅
| Category | Score | Bar |
|---|---|---|
| Dividend yield | 4 | |
| Dividend Stability | 5 | |
| Dividend growth | 3 | |
| Payout ratio | 2 | |
| Financial stability | 3 | |
| Dividend continuity | 5 | |
| Cashflow Coverage | 3 | |
| Balance Sheet Quality | 3 |
Total Score: 28/40
Rating 🏆
Overall, Stanley Black & Decker, Inc. shows strong promise as a dividend-paying entity despite challenging financial metrics in the short term. The extensive history of dividend payments and stable yield is attractive, although leveraged positions may be a concern. Continuous monitoring of cash flows and debt levels is recommended to ensure future profit gains and consistent dividend payouts. Investors seeking a reliable source of income with moderate growth prospects finding a suitable bet here.