Last update on 2024-06-27

AMETEK (AME) - Dividend Analysis (Final Score: 6/8)

Analyze AMETEK's (AME) dividend performance using an 8-criteria scoring system. Discover insights on stability, growth, coverage, and more.

Short Analysis - Dividend Score: 6

We're running AMETEK (AME) against the 8-criteria scoring system to evaluate the performance and stability of a company's dividend policy.

For those who are interested in delving deeper into the specifics, the subsequent section provides a comprehensive exploration of the criteria.

Dividend Yield Higher than the Industry Average?

The dividend yield measures how much a company pays in dividends each year relative to its stock price. This is an important measure of income for investors seeking regular cash flow. Comparing the dividend yield to the industry average can provide insights into the company's competitive attractiveness as a dividend payer.

The dividend yield for AMETEK (AME) at 0.6065% is consistently lower than the industry average of 1.57%. Historical data over the last 20 years also shows that AMETEK's dividend yield rarely exceeds 1%, indicating a cautious approach towards dividend disbursement. This trend suggests that while AMETEK may be retaining earnings for growth or minimizing dividend payout to manage risk, it may not be the most attractive option for income-focused investors compared to other industry players. For example, in 2023, while the industry average stood at 1.57%, AMETEK's dividend yield was only 0.6065%, positioning it significantly lower. Therefore, for investors prioritizing higher yields, AMETEK might not meet expectations despite its stable and slightly improving yield trend.

Average annual Growth Rate higher than 5% in the last 20 years?

The criterion evaluates if the company's dividend growth rate has consistently exceeded 5% over the past 20 years, which is a key indicator of financial health and profitability.

Analyzing AMETEK's (AME) dividend data from 2003 to 2023, we observe significant fluctuations and periods with zero dividends. For instance, in 2004, the dividend per share ratio peaked at 100.1125%, but dropped to zero in several subsequent years including 2005, 2008, 2009, and 2017. This volatility suggests an inconsistent dividend growth rate over the two decades. Although some years witnessed substantial increases, the overall average dividend ratio stands at 19.231%, but not consistently above 5% each year. Considering the criterion requires a stable growth rate above 5%, AMETEK's performance does not fulfill this requirement, indicating a less predictable and stable dividend policy. This trend might alarm long-term income-focused investors seeking consistent returns.

Average annual Payout Ratio lower than 65% in the last 20 years?

Explain the criterion for AMETEK (AME) and why it is important to consider

Payout ratio measures the proportion of earnings paid out as dividends. A ratio below 65% is generally safe as it indicates a company retains enough earnings to invest in growth and covers dividend payments.

Dividends Well Covered by Earnings?

Dividends are well covered by the earnings.

AMETEK's Earnings Per Share (EPS) over the years show a consistent upward trend from 2003 to 2023, with values growing from $0.3848 in 2003 to $5.6967 in 2023. Similarly, Dividend Per Share (DPS) has also increased, though at a slower pace, from $0.0356 in 2003 to $1 in 2023. The ratio of DPS to EPS is crucial because it helps measure the sustainability of dividend payments. A lower ratio indicates that the company's earnings are more than sufficient to cover its dividend payments. The ratios for AMETEK indicate that dividends have been consistently well covered by earnings, with values mostly below 20%. For instance, in 2023, the cover ratio is around 17.554%, which is very healthy. This consistent pattern demonstrates prudent financial management and suggests a stable outlook for dividend sustainability. Overall, this trend is good, indicating that AMETEK maintains a strong capacity to pay and potentially increase dividends while still investing in business growth.

Dividends Well Covered by Cash Flow?

Dividends Well Covered by Cash Flow

The criterion assesses if the company's dividends are sufficiently covered by its free cash flow. This is vital as it provides a measure of the company's ability to sustain its dividend payments without relying on external financing or exhausting its cash reserves.

Stable Dividends Since the Company Began Paying Dividends?

Stable dividend payments, where the dividend per share does not drop by more than 20% over 20 years, is critical for attracting stable income-seeking investors.

Analyzing AMETEK's (AME) dividend data over the past 20 years reveals a strong trend of stability and growth. The dividends per share have consistently increased over this period, with no evident drops exceeding 20%. The dividend per share rose from $0.0356 in 2003 to $1.00 in 2023, highlighting a robust and upward trend. For instance, between 2003 and 2004, the dividend per share doubled from $0.0356 to $0.0711; this pattern of growth emphasizes the company's commitment to rewarding its shareholders. Even during economically turbulent periods, such as the financial crisis of 2008 and the COVID-19 pandemic, AMETEK maintained or increased its dividends, reflecting resilience and robust financial health. This trend is highly favorable for long-term income-seeking investors who prioritize dividend stability and growth, making AMETEK a potentially attractive dividend investment.

Dividends Paid for Over 25 Years?

The consistency of dividends paid over an extended period is crucial as it signifies a company’s financial health, stability, and shareholder commitment.

AMETEK has shown a consistent trend of paying dividends for over the past 25 years, from 1998 to 2023. Starting with a dividend per share of $0.0356 in 1998, there has been a steady increase to $1 per share in 2023. This trend indicates a strong commitment to returning value to shareholders and reflects positively on the company's financial stability and profitability. Especially notable are the increases in critical years, such as the jump from $0.36 in 2018 to $0.56 in 2019. This consistent upward trend is highly favorable and suggests that AMETEK has not only maintained but also grown its dividend payout over time, which is beneficial for long-term investors.

Reliable Stock Repurchases Over the Past 20 Years?

Reliable Stock Repurchases Over the Past 20 Years

AMETEK's trend in share repurchases is relatively consistent but not overwhelmingly substantial. Over 20 years, they executed stock repurchases in seven distinct years—2008, 2010, 2015, 2016, 2017, 2019, and 2023. While the overall percentage of stock reduction (0.0591) is conservative, this persistence provides a continuous but modest value addition to shareholders. In evaluating the impact of repurchases, the decreased number of shares can lead to an increased earnings per share (EPS), assuming earnings remain stable or grow. However, due to its conservative buyback approach and limited number of favorable years, the impact of these repurchases on AMETEK's stock value is likely positive but modest. It indicates a cautious approach toward utilizing cash reserves for shareholder returns, which may be appreciated by risk-averse investors.