Last update on 2024-06-27

Dover (DOV) - Dividend Analysis (Final Score: 7/8)

Analyze Dover Corp's (DOV) stable and high-performing dividend policy with a robust 7/8 score. Discover insights on growth, sustainability, and reliability.

Short Analysis - Dividend Score: 7

We're running Dover (DOV) 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?

Dividend yield represents the ratio of annual dividend payments to the stock’s current market price. It reflects the income generated from an investment in the stock.

Dover's current dividend yield of 1.3198% is below the industry average of 1.57%, which can be a concern for income-focused investors. Historically, Dover has fluctuated between a low of 1.0958% in 2021 and a high of 2.7339% in 2008. Notably, years with higher yields often align with lower stock prices and market downturns, as seen in 2008 when Dover’s stock price was significantly lower at $22.0674. The recent declining trend in yield, with 1.3198% in 2023 following a previous dip to 1.4844% in 2022, may indicate robust stock price appreciation, as Dover closed at $153.81 in 2023, up from $135.41 in 2022. Given this context, the low yield is compensated by potential capital gains, balancing income expectations against growth potential.

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

The Dividend Growth Rate measures the annualized percentage growth of a company's dividend over a specific period. A growth rate higher than 5% is desirable as it usually indicates company stability and payouts growth.

The data suggests an erratic Dividend Per Share (DPS) ratio over the last 20 years, with notable peaks at years like 2008 (16.8746) and 2014 (28.8066), while recent years (2021-2023) show a significant drop below 2%. Evaluating long-term trends, the average ratio is 8.76%. Although volatility is evident, a general upward trend surpassing 5% is noteworthy. The varied trend can be perceived as good with caution, reflecting both opportunities and inherent risks.

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

A payout ratio lower than 65% is considered healthy as it indicates that the company retains a significant portion of its earnings for growth and operational needs. Consistently low payout ratios also imply potential for future dividend growth.

Dover (DOV) has an average payout ratio of 26.64% over the last 20 years, which is significantly below the 65% threshold. This consistently low payout ratio is a positive signal for investors as it demonstrates that the company has retained a substantial portion of its earnings, suggesting financial stability and capacity for future growth. The data shows that the payout ratio has remained below 50% for every year, further signifying prudent financial management. Such a trend is favorable as it indicates not only sustainability of dividends but also possible increases in future payouts.

Dividends Well Covered by Earnings?

Dividends are well covered by the earnings

The Dividend Payout Ratio (DPR) for Dover (DOV) is calculated as the dividend per share divided by the earnings per share. Looking at the historical data provided, DPR has ranged from approximately 0.16 to 0.48 over the last 20 years. These values are notably low, suggesting dividends are quite well covered by earnings. The most recent DPRs are 0.27 (2022) and 0.27 (2023), well below the critical 0.5 threshold. Furthermore, a lower ratio strengthens retained earnings for business growth and other needs. Nonetheless, intermittent uptrends such as in 2009, 2015, and 2018, demand vigilance. Overall, a DPR under 0.5 is favorable, earning stability for dividends and adequate reserving for growth.

Dividends Well Covered by Cash Flow?

Dividends Well Covered by Cash Flow is a metric that measures if the company generates enough cash flow to comfortably cover its dividend payments. A lower ratio indicates better coverage.

Over the span of 21 years, Dover's (DOV) Free Cash Flow has consistently been higher than its Dividend Payout Amount. The Dividend Coverage Ratio peaks at 45.4% in 2017, despite a minor decline in available Free Cash Flow in that year. This trend demonstrates strong dividend coverage, indicating the company's solid ability to sustain its dividend commitment. Therefore, based on the given figures, Dover’s trend in covering dividends with its cash flow is good, showcasing financial prudence and operational efficiency.

Stable Dividends Since the Company Began Paying Dividends?

Stability in dividend payments, where the dividend per share did not drop by more than 20% over the past two decades, is of utmost importance for income-seeking investors.

The dividend per share from 2003 to 2023 for Dover (DOV) shows a consistent upward trend. The dividend per share has risen from $0.3821 in 2003 to $2.03 in 2023. This upwards trend indicates a compound annual growth rate of approximately 7.4%. There is no single year within this time frame where Dover's dividend per share dropped by 20% or more. In fact, even during the 2008 financial crisis, Dover continued to grow its dividends, achieving significant stability and dependability in its dividend payments. Thus, for income-seeking investors, Dover's stable and consistently increasing dividends over the past two decades represent a vital strength, reinforcing investor confidence and potentially increasing shareholder value over the long term.

Dividends Paid for Over 25 Years?

Dividends Paid for Over 25 Years?

Dover (DOV) has paid increasing dividends consistently since 1998, illustrating a robust and reliable commitment to shareholder returns. Examining the past 26 years, starting with a dividend per share of $0.2681 in 1998 and ascending steadily to $2.03 in 2023, indicates not only the company's sustained ability to generate profit but also its shareholder-friendly approach. This trend of rising dividends is notably favorable and portrays strong financial health and management efficacy, which is instrumental for long-term investors looking for stable income generation.

Reliable Stock Repurchases Over the Past 20 Years?

Explain the criterion for Dover (DOV) and why it is important to consider

Reliable stock repurchases over the past 20 years