This Is Graco's Dividend Score After Paying Investors

"Graco just paid investors $0.295 per share on February 4, 2026, marking the company's 27th consecutive year of quarterly dividend payments. This industrial equipment manufacturer has quietly built one of the more consistent dividend growth records in the specialty machinery sector, with a 5-year compound annual growth rate of approximately 9.4%. But consistency alone doesn't tell the full story-investors need to understand whether this dividend is sustainable, how it stacks up against peers, and what the latest financials reveal about Graco's ability to keep raising payouts."

"Graco's current dividend yield sits at just 1.19%, well below the yields offered by traditional income stocks in sectors like telecommunications or consumer staples. AT&T yields 4.05%, Verizon delivers 5.77%, and General Mills offers 4.97%. Even within industrials, Caterpillar's yield of 0.8% trails Graco by only 39 basis points. The trade-off becomes clear when examining dividend growth. Graco increased its quarterly payout from $0.275 in Q1 2025 to $0.295 in Q1 2026-a 7.3% year-over-year increase."

"Dividend sustainability hinges on cash generation, not just reported earnings. Graco generated $683.6 million in operating cash flow during fiscal 2025 while paying out $183.4 million in dividends-a payout ratio of just 26.8%. That coverage ratio of 3.7x provides substantial cushion for continued dividend growth even if business conditions soften. The company's free cash flow of $637.9 million (after $45.7 million in capital expenditures) left $454.6 million available after dividend payments."

Graco paid $0.295 per share on February 4, 2026, marking its 27th consecutive year of quarterly dividend payments. The company achieved a roughly 9.4% five-year compound annual dividend growth rate while maintaining a current yield of 1.19%. Recent payout rose from $0.275 in Q1 2025 to $0.295 in Q1 2026, a 7.3% increase. Fiscal 2025 operating cash flow reached $683.6 million with $183.4 million paid in dividends, yielding a 26.8% payout ratio and 3.7x coverage. Free cash flow was $637.9 million after $45.7 million in capital expenditures, leaving $454.6 million available after dividends, and Graco deployed much of that excess cash.

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