Last update on 2024-06-27

Roper Technologies (ROP) - Dividend Analysis (Final Score: 5/8)

Discover the comprehensive dividend analysis of Roper Technologies (ROP), evaluating performance and stability using an 8-criteria scoring system, with an overall score of 5/8.

Short Analysis - Dividend Score: 5

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

Roper Technologies (ROP) has a mixed dividend profile based on an 8-criteria scoring system, earning a score of 5 out of 8. The company's dividend yield of 0.5011% is significantly lower than the industry average of 1.57%. Despite this, ROP has shown consistent capital appreciation and increase in dividend payouts over the years. Its average annual dividend growth rate of 15.7% exceeds the 5% benchmark, although it has been highly variable. ROP maintains a low payout ratio averaging 14.35%, indicating strong potential for sustainable dividends. Dividends have been reliably covered by earnings, except for an unusual spike in 2022. Over the past 20 years, ROP has consistently increased its dividends without major cuts, paying dividends for over 25 years. However, the company has not shown a reliable pattern of stock repurchases, with notable buybacks only in 2009 and 2019.

Insights for Value Investors Seeking Stable Income

While Roper Technologies (ROP) may not excel in every area, particularly with its dividend yield and inconsistent stock repurchases, its strong capital appreciation, consistent dividend payments, low payout ratio, and stable dividend growth make it a solid consideration for long-term investors seeking stability and growth potential. The company’s positive dividend trends amidst substantial stock price increases suggest prudent financial management and a focus on reinvestment and expansion. However, investors wanting high dividend yields might need to look elsewhere.

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

Roper Technologies' dividend yield of 0.5011% is notably lower than the industry average of 1.57%. This trend of having a lower dividend yield has persisted over the past two decades. For instance, in 2003, Roper's dividend yield was 0.7146%, compared to the industry average of 1.72%. By 2023, while Roper's yield had slightly decreased to 0.5011%, the industry average stood at 1.57%. However, the stock price for ROP has increased significantly from $24.63 in 2003 to $545.17 in 2023. The relatively low dividend yield can be attributed to the substantial rise in stock price, which dampens the yield percentage even as dividend payouts have consistently increased from $0.176 per share in 2003 to $2.732 per share in 2023. Therefore, while the yield is low, it's important to note Roper's substantial capital appreciation, which compensates for the lower dividend yield. This trend is not inherently bad as it shows the company's growth orientation and preference for reinvesting earnings for expansion rather than distributing higher dividends.

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

Dividend Growth Rate is a measure of the annualized percentage rate of growth of a company's dividend payments.

Roper Technologies (ROP) has experienced inconsistent year-on-year dividend growth rates over the past 20 years. Notably, the Dividend Ratio fluctuated from the low of -30.96% in 2013 to a high of 62.95% in 2012. The average Dividend Ratio over this period was approximately 15.7%. This overall average suggests a generally positive trend in dividend payments, indicating that Roper Technologies prioritized returning capital to shareholders, albeit with considerable volatility. Therefore, given the average is well above the 5% benchmark, the growth trend is favorable, though the high variability introduces some risk.

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

The payout ratio compares the dividends paid by a company to its earnings. It's essential to ensure the average payout ratio is below 65% to confirm the company's dividends are sustainable without compromising growth.

Roper Technologies has consistently maintained a prudent approach towards its dividend payouts, with an average payout ratio of 14.35% over the past 20 years. This figure is well below the 65% threshold, suggesting a robust and sustainable approach to dividend distributions. Over the analyzed period, the payout ratio has fluctuated minimally, generally staying within the 10-25% range. Notably, the lowest payout ratio observed was 5.78% in 2022, while the highest was 24.89% in 2003. This conservative distribution strategy allows Roper to reinvest a significant portion of its earnings into growth opportunities while still rewarding shareholders, indicative of sound financial management. Such a trend is highly favorable for long-term investors seeking stable and sustainable dividend income amidst company growth.

Dividends Well Covered by Earnings?

Dividends are well covered by the earnings

The company's earnings per share (EPS) and dividends per share (DPS) trends show that Roper Technologies has generally maintained a sound coverage of its dividends by its earnings. Ideally, the dividend coverage ratio should be above 2, indicating that the company earns at least twice the amount it distributes as dividends. In Roper’s case, the coverage ratio has consistently been above 0.1 except for one unusual spike in 2022. Analyzing the EPS growth, significant jumps such as the nearly fourfold increase in 2022 to $42.915 create transient drops in the dividend coverage ratio, observable where the ratio fell to approximately 0.057 that year. This suggests either a one-time extraordinary income or a change in accounting practice. Such fluctuations can obscure the long-term stability unless clarified in financial notes. However, excluding 2022, the general upward trend in EPS and modest but steady growth in DPS suggests a healthy financial footing. Thus, recent data implies the dividends are comfortably covered by earnings, contributing to stability and growth assurance for investors.

Dividends Well Covered by Cash Flow?

Explain the criterion for Roper Technologies (ROP) and why it is important to consider

Dividends Well Covered by Cash Flow

Stable Dividends Since the Company Began Paying Dividends?

Assessing the stability of dividends over the past 20 years is vital for evaluating the reliability of income for investors reliant on dividend income.

Over the past 20 years, Roper Technologies (ROP) has exhibited consistent growth in its dividend per share, starting from $0.176 in 2003 to $2.732 in 2023. Notably, there was no year where the dividend decreased by 20% or more compared to the previous year. In fact, the dividend has steadily increased each year, showcasing robust financial health and a commitment to returning value to shareholders. For example, the dividend increased significantly from $1.852 in 2019 to $2.732 in 2023. This predictable rise in dividends is advantageous for income-seeking investors as it shows ROP's reliability in providing consistent returns, marking this trend as very good.

Dividends Paid for Over 25 Years?

The criterion checks if Roper Technologies (ROP) has consistently paid dividends for over 25 years, which signifies stability and reliability.

Analyzing the given historical data from 1998 to 2023, it is clear that Roper Technologies (ROP) has consistently paid dividends for each year in this period. The dividend per share started at $0.12 in 1998 and has shown a remarkable growth to reach $2.732 in 2023. This uninterrupted and increasing dividend payment over 25 years is a strong indicator of the company's financial stability, profitability, and commitment to returning value to shareholders. The growing dividends also signify positive cash flows and disciplined financial management. Generally, such a trend is highly favorable for long-term and income-focused investors, who seek steady and increasing income through dividend payments. With an annual increase seen almost every year, this trend for ROP is very good.

Reliable Stock Repurchases Over the Past 20 Years?

Assessing the reliability of stock repurchases over a 20-year period is crucial. Companies that consistently repurchase their shares often signal strong cash flow, confidence in their future, and a commitment to returning value to shareholders.

Over the past 20 years, Roper Technologies (ROP) hasn't demonstrated a consistent stock repurchase pattern. The only notable years of share repurchases were 2009 and 2019. Furthermore, the average rate of repurchase over the period stands at merely 2.6971, indicating that the company has generally been issuing more shares rather than reducing them. This trend is not favorable for investors who look for long-term value returns through repurchases, which typically help in increasing earnings per share (EPS) and the intrinsic value of remaining shares. In summary, ROP's repurchase track record doesn't reflect strong reliability in capital returns through buybacks.