July 17, 2025 a 11:31 am
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TDG: Dividend Analysis - TransDigm Group Incorporated
TransDigm Group Incorporated, a prominent player in the aerospace components sector, exhibits a compelling dividend profile. Despite a substantial payout ratio, the company's consistent yield and historical growth suggest a strategic focus on returning value to shareholders. However, high leverage could present constraints. Investors should weigh the robust dividend against the complex financial backdrop.
📊 Overview
TransDigm Group Incorporated is a distinguished entity within the aerospace sector. Its dividend yield of 5.53% coupled with a current dividend per share of $35.26 underscores an attractive income proposition. With a 10-year dividend history and a noted suspension in 2022, the company demonstrates both resilience and caution.
| Metric | Value |
|---|---|
| Sector | Aerospace |
| Dividend Yield | 5.53 % |
| Current Dividend per Share | 35.26 USD |
| Dividend History | 10 years |
| Last Cut or Suspension | 2022 |
🗣️ Dividend History
The dividend history of TransDigm reveals a commitment to shareholder returns, though punctuated by periodic fluctuations. Historical payouts are vital in analyzing the company's consistency and strategic capital allocation.
| Year | Dividend per Share (USD) |
|---|---|
| 2024 | 75 |
| 2023 | 35 |
| 2022 | 18.5 |
| 2019 | 62.5 |
| 2017 | 22 |
📈 Dividend Growth
Analyzing the dividend growth rate is crucial for gauging future income potential. TransDigm's growth rates of approximately 6.27% over 3 years and 3.71% over 5 years signal moderate yet reliable expansion.
| Time | Growth |
|---|---|
| 3 years | 6.27 % |
| 5 years | 3.71 % |
The average dividend growth is 3.71% over 5 years, demonstrating moderate but steady growth, which is favorable for long-term investors.
📉 Payout Ratio
The payout ratio is a critical indicator of dividend sustainability. TransDigm's EPS-based payout ratio of 107.76% and FCF-based ratio of 104.18% suggest aggressive distributions, potentially challenging to sustain without robust earnings.
| Key Figure | Ratio |
|---|---|
| EPS-based | 107.76 % |
| Free cash flow-based | 104.18 % |
The high EPS and FCF payout ratios indicate a strained ability to fund dividends solely from operational income, warranting monitoring of income stability.
💰 Cashflow & Capital Efficiency
Analyzing cash flow metrics provides insight into the operational efficiency and capital utilization of TransDigm. Positive yields and efficient CAPEX relative to OCF are indicative of strategic reinvestment.
| Metric | 2024 | 2023 | 2022 |
|---|---|---|---|
| Free Cash Flow Yield | 2.28 % | 2.56 % | 2.71 % |
| Earnings Yield | 2.08 % | 2.69 % | 2.84 % |
| CAPEX to Operating Cash Flow | 8.61 % | 10.11 % | 12.55 % |
| Free Cash Flow / Operating Cash Flow Ratio | 91.93 % | 89.89 % | 87.44 % |
The data suggests efficient cash flow management with strong FCF coverage. However, challenges in CAPEX efficiency should be addressed to maintain financial flexibility.
🗣️ Balance Sheet & Leverage Analysis
A robust balance sheet and manageable leverage are fundamental for financial resilience. TransDigm's heavy leverage and negative equity ratios warrant careful scrutiny.
| Metric | 2024 | 2023 | 2022 |
|---|---|---|---|
| Debt-to-Equity | -3.96 | -9.88 | -5.25 |
| Debt-to-Assets | 0.97 | 0.98 | 1.09 |
| Net Debt to EBITDA | 4.82 | 5.12 | 6.84 |
| Current Ratio | - | - | - |
Negative equity and high leverage ratios present significant risk, which could affect the company's ability to meet its obligations and reinvest in growth.
📊 Fundamental Strength & Profitability
Fundamental strength is pivotal for long-term viability. Despite cyclical challenges, TransDigm maintains a notable Return on Invested Capital, indicative of efficient capital allocation.
| Metric | 2024 | 2023 | 2022 |
|---|---|---|---|
| Return on Equity | -27.25 % | -65.42 % | -22.95 % |
| Return on Assets | 6.70 % | 6.50 % | 4.78 % |
| Net Margin | 21.59 % | 19.71 % | 15.95 % |
Despite considerable RoE volatility, stable RoA and strong margins point towards core profitability, though the sustainability of these metrics must be vigilantly monitored.
📈 Price Development
✅ Dividend Scoring System
| Criteria | Score | Score Bar |
|---|---|---|
| Dividend Yield | 4 | |
| Dividend Stability | 3 | |
| Dividend Growth | 3 | |
| Payout Ratio | 2 | |
| Financial Stability | 2 | |
| Dividend Continuity | 3 | |
| Cashflow Coverage | 4 | |
| Balance Sheet Quality | 2 |
Total Score: 23 out of 40
⚠️ Rating
TransDigm Group Incorporated presents a mixed investment proposition with a potentially attractive but high-risk dividend profile. The high leverage and payout ratios necessitate cautious optimism. While the dividend promises potential income, vigilance regarding financial performance and industry trends is critical for sustained returns.