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Graco (GGG) Announces 12% Hike in Quarterly Dividend Rate

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Graco Inc. (GGG - Free Report) , on Dec 3, announced that it is rewarding shareholders with a hike in the quarterly dividend rate. The raise is supported by the company’s strong cash position.

GGG’s shares moved down 0.3% to close at $75.40 on Friday.

Inside the Headlines

As revealed, Graco’s board of directors approved a 12% or 2.25 cents per share hike in the quarterly dividend rate, which moved from 18.75 cents to 21 cents. On an annualized basis, the dividend increased to 84 cents from 75 cents per share.

Graco will pay out the revised amount on Feb 2, 2022, to shareholders on record as of Jan 18.

Sound Shareholder-Friendly Policies

Graco firmly believes in rewarding shareholders handsomely through dividend payments. In the last five years (2016-2020), the company’s dividend paid out increased from 44 cents per share in 2016 to 52.5 cents in 2020. In December 2020, it had raised the quarterly dividend rate by 7.1%.

Further, in the first three quarters of 2021, the company paid out a dividend of $95.2 million in cash to its shareholders, reflecting an increase of 8.6% from the year-ago comparable period.

We believe that impressive financial performance in the quarters ahead is likely to enable it to continue rewarding its shareholders handsomely.

Zacks Rank, Price Performance and Estimate Revisions

Graco, with approximately $12.8 billion market capitalization, currently carries a Zacks Rank #3 (Hold). The company is poised to benefit from solid demand for its products, exposure in new markets, acquisitions and a healthy liquidity position. Exiting the third quarter of 2021, the company’s cash and cash equivalents totaled $603.8 million, reflecting a 25.1% increase sequentially. However, headwinds arising from inflationary pressures (primarily related to raw materials), logistics and supply-chain woes might affect its near-term performance.

In the past 60 days, the Zacks Consensus Estimate for earnings has decreased 4% to $2.41 for 2021 and 0.4% to $2.70 for 2022. Also, earnings estimates for the fourth quarter of 2021 have decreased 4.5% to 64 cents per share.

Zacks Investment ResearchImage Source: Zacks Investment Research

In the past three months, the stock has lost 2.3% compared with the industry’s decline of 4.6%.

Key Picks

Some better-ranked companies from the same space are discussed below.

Helios Technologies, Inc. (HLIO - Free Report) presently carries a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here. Its earnings surprise in the last four quarters was 37.54%, on average.

In the past 30 days, Helios’ earnings estimates have increased 7.9% for 2021 and 9.8% for 2022. Its shares have gained 17.6% in the past three months.

Applied Industrial Technologies, Inc. (AIT - Free Report) presently carries a Zacks Rank #2. Its earnings surprise in the last four quarters was 26.71%, on average.

Applied Industrial’s earnings estimates have been stable for fiscal 2022 (ending June 2022) and fiscal 2023 (ending June 2023) in the past 30 days. Its shares have gained 13.4% in the past three months.

Welbilt, Inc. (WBT - Free Report) presently carries a Zacks Rank #2. Its average earnings surprise in the last four quarters was 172.50%.

Welbilt’s estimates for 2021 have been stable for 2021 and 2022 in the past 30 days. Its shares have gained 0.5% in the past three months.