Is NYSE:AOS a Good Fit for Dividend Investing?

SMITH (A.O.) CORP (NYSE:AOS) has caught the attention of dividend investors as a stock worth considering. NYSE:AOS excels in profitability, solvency, and liquidity, all while providing a decent dividend. Let's delve into the details.

Analyzing Dividend Metrics

ChartMill assigns a proprietary Dividend Rating to each stock. The score is computed by evaluating various valuation aspects, like the yield, the history, the dividend growth and sustainability. NYSE:AOS was assigned a score of 7 for dividend:

• AOS's Dividend Yield is rather good when compared to the industry average which is at 0.94. AOS pays more dividend than 100.00% of the companies in the same industry.
• On average, the dividend of AOS grows each year by 9.92%, which is quite nice.
• AOS has paid a dividend for at least 10 years, which is a reliable track record.
• AOS has not decreased their dividend for at least 10 years, which is a reliable track record.
• 33.62% of the earnings are spent on dividend by AOS. This is a low number and sustainable payout ratio.

How do we evaluate the Health for NYSE:AOS?

To gauge a stock's financial health, ChartMill utilizes a Health Rating on a scale of 0 to 10. This comprehensive evaluation encompasses liquidity and solvency, both in absolute terms and in comparison to industry peers. NYSE:AOS has earned a 8 out of 10:

• An Altman-Z score of 8.15 indicates that AOS is not in any danger for bankruptcy at the moment.
• The Altman-Z score of AOS (8.15) is better than 84.62% of its industry peers.
• AOS has a debt to FCF ratio of 0.25. This is a very positive value and a sign of high solvency as it would only need 0.25 years to pay back of all of its debts.
• With an excellent Debt to FCF ratio value of 0.25, AOS belongs to the best of the industry, outperforming 87.18% of the companies in the same industry.
• A Debt/Equity ratio of 0.06 indicates that AOS is not too dependend on debt financing.
• AOS's Debt to Equity ratio of 0.06 is fine compared to the rest of the industry. AOS outperforms 79.49% of its industry peers.
• AOS does not score too well on the current and quick ratio evaluation. However, as it has excellent solvency and profitability, these ratios do not necessarly indicate liquidity issues and need to be evaluated against the specifics of the business.

Profitability Insights: NYSE:AOS

ChartMill employs its own Profitability Rating system for stock evaluation. This score, ranging from 0 to 10, is derived from an analysis of diverse profitability metrics and margins. In the case of NYSE:AOS, the assigned 8 is noteworthy for profitability:

• The Return On Assets of AOS (17.79%) is better than 89.74% of its industry peers.
• AOS has a Return On Equity of 29.28%. This is amongst the best in the industry. AOS outperforms 82.05% of its industry peers.
• AOS's Return On Invested Capital of 24.35% is amongst the best of the industry. AOS outperforms 94.87% of its industry peers.
• The Average Return On Invested Capital over the past 3 years for AOS is above the industry average of 13.58%.
• The 3 year average ROIC (17.74%) for AOS is below the current ROIC(24.35%), indicating increased profibility in the last year.
• AOS has a better Profit Margin (14.41%) than 76.92% of its industry peers.
• AOS has a Operating Margin of 19.04%. This is in the better half of the industry: AOS outperforms 74.36% of its industry peers.
• AOS's Operating Margin has improved in the last couple of years.
• AOS has a Gross Margin of 38.21%. This is in the better half of the industry: AOS outperforms 66.67% of its industry peers.

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Our latest full fundamental report of AOS contains the most current fundamental analsysis.

Disclaimer

This article should in no way be interpreted as advice. The article is based on the observed metrics at the time of writing, but you should always make your own analysis and trade or invest at your own responsibility.