Snap-on Inc's Dividend Analysis
In This Article:
A Comprehensive Look at Snap-on Inc's Upcoming Dividend and Historical Performance
Snap-on Inc (NYSE:SNA) recently announced a dividend of $1.86 per share, payable on 2023-12-11, with the ex-dividend date set for 2023-11-20. As investors look forward to this upcoming payment, the spotlight also shines on the company's dividend history, yield, and growth rates. Using the data from GuruFocus, let's look into Snap-on Inc's dividend performance and assess its sustainability.
What Does Snap-on Inc Do?
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Snap-on manufactures premium tools and software for repair professionals. Hand tools are sold through franchisee-operated mobile vans that serve auto technicians who purchase tools at their own expense. A unique element of its business model is that franchisees bear significant risk, as they must invest in the mobile van, inventory, and software. At the same time, franchisees extend personal credit directly to technicians on an individual tool basis. Snap-on currently operates three segments: repair systems and information, commercial and industrial, and tools. Its finance arm provides financing to franchisees to run their operations, which includes offering loans and leases for mobile vans.
A Glimpse at Snap-on Inc's Dividend History
Snap-on Inc has maintained a consistent dividend payment record since 1986, distributing dividends on a quarterly basis. The company has also demonstrated a commitment to growing its dividends, having increased them annually since 1995. This consistent increase qualifies Snap-on Inc as a dividend aristocrat, a prestigious group of companies that have raised their dividends for at least 28 consecutive years. Below is a chart showing annual Dividends Per Share to track historical trends.
Breaking Down Snap-on Inc's Dividend Yield and Growth
Snap-on Inc currently boasts a 12-month trailing dividend yield of 2.33% and a forward dividend yield of 2.68%, indicating an anticipated increase in dividend payments over the next year. The company's dividend growth has been impressive over multiple timeframes. The 3-year annual dividend growth rate stands at 14.40%, the 5-year at 14.70%, and the 10-year at a robust 15.60%. These growth rates translate to a 5-year yield on cost of approximately 4.63% for Snap-on Inc stock as of today.
The Sustainability Question: Payout Ratio and Profitability
The sustainability of Snap-on Inc's dividend is underpinned by its dividend payout ratio, which stands at 0.35 as of 2023-09-30. This metric indicates that the company retains a substantial portion of its earnings for future growth and potential downturns. Snap-on Inc's profitability rank further supports dividend sustainability, with GuruFocus awarding it a perfect score of 10 out of 10, reflecting excellent profitability prospects. The company has also reported positive net income each year for the past decade, reinforcing its financial stability.