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Watsco (WSO) Rewards Investors With a 10% Dividend Increase
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Watsco, Inc. (WSO - Free Report) gained 0.5% on Apr 1 after it announced a 10% hike in its quarterly cash dividend. The largest distributor of heating, ventilation, air conditioning and refrigeration equipment (HVAC/R) in North America will pay out a quarterly dividend of $2.70 per share on Apr 30, 2024, to shareholders on record as of Apr 15.
The company currently has a dividend payout ratio of 72% and a dividend yield of 2.27%, based on the closing share price of $434.17 on Apr 1. This marks the company’s 50th consecutive annual dividend increase.
With the recent move, Watsco is maintaining its commitment to increase stockholders’ returns regularly. This move reflects the company’s sound and stable financial position and commitment to rewarding shareholders amid industry-wide challenges.
Will This Sustain?
Watsco's recent dividend hike underscores its robust confidence in the business outlook, bolstered by a solid balance sheet. Devoid of any debt, the balance sheet stands resilient, poised to seize any forthcoming opportunities. Noteworthy is the significant decrease in bad debt, plummeting by approximately 20% in 2023.
Watsco has been paying cash dividends for decades. It has been consistently sharing its cash flows with shareholders and maintaining a strong financial position. Watsco ended 2023 with cash and cash equivalents of $210.1 million, reflecting an increase from $147.5 million at 2022-end. The company has sufficient funds to meet the short-term obligation of $100.3 million.
Additionally, operating cash flow in fourth-quarter 2023 increased 40% to a record $299 million, including a $208 million reduction in inventories. This reflects significantly improved levels of cash flow for the quarter.
The company’s financial strength, access to low-cost capital and ability to generate cash flow provide confidence to the stakeholders.
Investors always prefer a return-generating stock. A high-dividend-yielding one is much coveted. It goes without saying that stockholders are always on the lookout for companies with a track record of consistent and incremental dividend payments.
Image Source: Zacks Investment Research
However, shares of the company have gained 35.6% in the past year compared with the Zacks Building Products - Air Conditioner and Heating industry’s 62.7% rise. Persisting fixed cost inflation and increased SG&A expenses are concerns. Earnings estimates for 2024 have decreased to $14.26 per share from $14.65 over the past 30 days, depicting analysts' concerns over the company's prospects.
Zacks Rank and Stocks to Consider
Currently, Watsco carries a Zacks Rank #3 (Hold).
Some better-ranked stocks that warrant a look in the sector are as follows:
Advanced Drainage Systems, Inc. (WMS - Free Report) currently sports a Zacks Rank of 1 (Strong Buy). WMS delivered a trailing four-quarter earnings surprise of a whopping 37.1%, on average. The stock has risen 52.3% in the past six months. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Advanced Drainage Systems’ 2024 earnings per share (EPS) has increased to $6.19 from $5.88 over the past 30 days.
Armstrong World Industries, Inc. (AWI - Free Report) currently carries a Zacks Rank of 1. AWI delivered a trailing four-quarter earnings surprise of 13.1%, on average. Shares of the company have surged 74.9% in the past six months.
The Zacks Consensus Estimate for Armstrong World Industries’ EPS for 2024 has increased to $5.74 from $5.65 over the past 30 days.
Masco Corporation (MAS - Free Report) currently carries a Zacks Rank #2 (Buy). This leading manufacturer of branded home improvement and building products has a trailing four-quarter earnings surprise of 23.4%, on average.
Shares of MAS have rallied 50.4% in the past six months. Estimates for Masco’s EPS for 2024 have increased to $4.12 from $3.98 over the past 60 days.
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Watsco (WSO) Rewards Investors With a 10% Dividend Increase
Watsco, Inc. (WSO - Free Report) gained 0.5% on Apr 1 after it announced a 10% hike in its quarterly cash dividend. The largest distributor of heating, ventilation, air conditioning and refrigeration equipment (HVAC/R) in North America will pay out a quarterly dividend of $2.70 per share on Apr 30, 2024, to shareholders on record as of Apr 15.
The company currently has a dividend payout ratio of 72% and a dividend yield of 2.27%, based on the closing share price of $434.17 on Apr 1. This marks the company’s 50th consecutive annual dividend increase.
With the recent move, Watsco is maintaining its commitment to increase stockholders’ returns regularly. This move reflects the company’s sound and stable financial position and commitment to rewarding shareholders amid industry-wide challenges.
Will This Sustain?
Watsco's recent dividend hike underscores its robust confidence in the business outlook, bolstered by a solid balance sheet. Devoid of any debt, the balance sheet stands resilient, poised to seize any forthcoming opportunities. Noteworthy is the significant decrease in bad debt, plummeting by approximately 20% in 2023.
Watsco has been paying cash dividends for decades. It has been consistently sharing its cash flows with shareholders and maintaining a strong financial position. Watsco ended 2023 with cash and cash equivalents of $210.1 million, reflecting an increase from $147.5 million at 2022-end. The company has sufficient funds to meet the short-term obligation of $100.3 million.
Additionally, operating cash flow in fourth-quarter 2023 increased 40% to a record $299 million, including a $208 million reduction in inventories. This reflects significantly improved levels of cash flow for the quarter.
The company’s financial strength, access to low-cost capital and ability to generate cash flow provide confidence to the stakeholders.
Investors always prefer a return-generating stock. A high-dividend-yielding one is much coveted. It goes without saying that stockholders are always on the lookout for companies with a track record of consistent and incremental dividend payments.
Image Source: Zacks Investment Research
However, shares of the company have gained 35.6% in the past year compared with the Zacks Building Products - Air Conditioner and Heating industry’s 62.7% rise. Persisting fixed cost inflation and increased SG&A expenses are concerns. Earnings estimates for 2024 have decreased to $14.26 per share from $14.65 over the past 30 days, depicting analysts' concerns over the company's prospects.
Zacks Rank and Stocks to Consider
Currently, Watsco carries a Zacks Rank #3 (Hold).
Some better-ranked stocks that warrant a look in the sector are as follows:
Advanced Drainage Systems, Inc. (WMS - Free Report) currently sports a Zacks Rank of 1 (Strong Buy). WMS delivered a trailing four-quarter earnings surprise of a whopping 37.1%, on average. The stock has risen 52.3% in the past six months. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Advanced Drainage Systems’ 2024 earnings per share (EPS) has increased to $6.19 from $5.88 over the past 30 days.
Armstrong World Industries, Inc. (AWI - Free Report) currently carries a Zacks Rank of 1. AWI delivered a trailing four-quarter earnings surprise of 13.1%, on average. Shares of the company have surged 74.9% in the past six months.
The Zacks Consensus Estimate for Armstrong World Industries’ EPS for 2024 has increased to $5.74 from $5.65 over the past 30 days.
Masco Corporation (MAS - Free Report) currently carries a Zacks Rank #2 (Buy). This leading manufacturer of branded home improvement and building products has a trailing four-quarter earnings surprise of 23.4%, on average.
Shares of MAS have rallied 50.4% in the past six months. Estimates for Masco’s EPS for 2024 have increased to $4.12 from $3.98 over the past 60 days.