Summary: Brady Corp (NYSE:BRC) recently declared a dividend of $0.24 per share, set to be paid on January 31, 2024, with an ex-dividend date of January 9, 2024. While investors eagerly anticipate this upcoming payment, it’s important to evaluate Brady Corp’s dividend history, yield, and growth rates. Let’s delve into the company’s dividend performance and sustainability using data from GuruFocus.
Brady Corp’s Business Operations
Brady Corp specializes in providing identification solutions and workplace safety products under the Brady brand. Their products include safety signs, labeling systems, wire identification, patient identification, and workplace safety and compliance products. The majority of their operations are concentrated in the United States.
A Look into Brady Corp’s Dividend History
Brady Corp has an impressive track record of consistent dividend payments, with a history dating back to 1985. The company currently distributes dividends on a quarterly basis and has increased its dividend every year since 1986, making it a dividend aristocrat. Charting their annual dividends per share over time showcases their commitment to consistent dividend growth.
Breaking Down Brady Corp’s Dividend Yield and Growth
As of now, Brady Corp has a 12-month trailing dividend yield of 1.54% and a 12-month forward dividend yield of 1.57%. This suggests an expectation of increased dividend payouts in the coming year. However, compared to their global competitors in the Business Services industry, Brady Corp’s dividend yield falls below average, indicating that it might not be a compelling proposition for income investors. Over the past three years, the company’s annual dividend growth rate has been 1.90%, increasing to 2.00% over a five-year period. The yield on cost for Brady Corp stock, based on the dividend yield and five-year growth rate, is approximately 1.70%.
The Sustainability Question: Payout Ratio and Profitability
Assessing the sustainability of dividends requires a look at the company’s payout ratio. Brady Corp’s dividend payout ratio is currently 0.25, indicating that it retains a significant portion of earnings for future growth and uncertainties. In terms of profitability, the company ranks 8 out of 10 as of October 31, 2023, suggesting strong earnings prospects compared to peers. Brady Corp has reported net profit in 9 out of the past 10 years, demonstrating stability.
Growth Metrics: The Future Outlook
To ensure sustainable dividends, a company must exhibit solid growth metrics. Brady Corp’s growth rank of 8 out of 10 indicates a positive growth trajectory relative to competitors. Their revenue per share and 3-year revenue growth rate suggest a strong revenue model, outperforming a significant portion of global competitors. Over the past three years, the company’s earnings per share have grown by approximately 15.40% annually, surpassing the majority of global competitors. Additionally, Brady Corp’s 5-year EBITDA growth rate of 12.70% outperforms a substantial portion of global competitors.
Final Thoughts
In conclusion, Brady Corp’s consistent dividend growth, manageable payout ratio, strong profitability, and positive growth metrics position them as a company with a sustainable dividend policy. While their current dividend yield may not be the highest, their track record and growth prospects provide reassurance for investors seeking stability and incremental growth. As a dividend aristocrat, Brady Corp aims to continue its streak and deliver favorable returns to shareholders. However, individual investors need to carefully assess the company’s potential within the context of their portfolios and investment objectives.