What Makes Pentair plc (NYSE:PNR) A Great Dividend Stock?

Pentair plc (NYSE:PNR) has pleased shareholders over the past 10 years, paying out an average dividend of 2.00% annually. The stock currently pays out a dividend yield of 1.62%, and has a market cap of US$7.69b. Should it have a place in your portfolio? Let’s take a look at Pentair in more detail. Check out our latest analysis for Pentair

5 checks you should do on a dividend stock

If you are a dividend investor, you should always assess these five key metrics:

  • Is its annual yield among the top 25% of dividend-paying companies?
  • Has it consistently paid a stable dividend without missing a payment or drastically cutting payout?
  • Has the amount of dividend per share grown over the past?
  • Is its earnings sufficient to payout dividend at the current rate?
  • Will it have the ability to keep paying its dividends going forward?

NYSE:PNR Historical Dividend Yield June 23rd 18
NYSE:PNR Historical Dividend Yield June 23rd 18

Does Pentair pass our checks?

The company currently pays out 49.79% of its earnings as a dividend, according to its trailing twelve-month data, meaning the dividend is sufficiently covered by earnings. However, going forward, analysts expect PNR’s payout to fall to 36.62% of its earnings, which leads to a dividend yield of around 2.17%. Furthermore, EPS is also forecasted to fall to $2.11 in the upcoming year. The lower EPS on top of a lower payout ratio will lead to a fall in dividend payment moving forward.

If there’s one type of stock you want to be reliable, it’s dividend stocks and their stable income-generating ability. In the case of PNR it has increased its DPS from $0.68 to $0.70 in the past 10 years. It has also been paying out dividend consistently during this time, as you’d expect for a company increasing its dividend levels. These are all positive signs of a great, reliable dividend stock.

In terms of its peers, Pentair produces a yield of 1.62%, which is on the low-side for Machinery stocks.

Next Steps:

Considering the dividend attributes we analyzed above, Pentair is definitely worth keeping an eye on for someone looking to build a dedicated income portfolio. Given that this is purely a dividend analysis, I urge potential investors to try and get a good understanding of the underlying business and its fundamentals before deciding on an investment. I’ve put together three pertinent factors you should further examine:

  1. Future Outlook: What are well-informed industry analysts predicting for PNR’s future growth? Take a look at our free research report of analyst consensus for PNR’s outlook.
  2. Valuation: What is PNR worth today? Even if the stock is a cash cow, it’s not worth an infinite price. The intrinsic value infographic in our free research report helps visualize whether PNR is currently mispriced by the market.
  3. Other Dividend Rockstars: Are there better dividend payers with stronger fundamentals out there? Check out our free list of these great stocks here.