Why NYSE:AOS is a Top Pick for Dividend Investors.

Last update: Jan 8, 2025

SMITH (A.O.) CORP (NYSE:AOS) is a hidden gem unveiled by our stock screening tool, featuring a promising dividend outlook alongside solid fundamentals. NYSE:AOS demonstrates decent financial health and profitability while ensuring a sustainable dividend. Let's break it down further.

ChartMill's Evaluation of Dividend

ChartMill employs its own Dividend Rating system for all stocks. This score, on a scale of 0 to 10, is determined by evaluating different dividend factors, such as yield, historical performance, dividend growth, and sustainability. NYSE:AOS has been assigned a 7 for dividend:

AOS's Dividend Yield is rather good when compared to the industry average which is at 1.08. 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.
AOS pays out 33.62% of its income as dividend. This is a sustainable payout ratio.

Understanding NYSE:AOS's Health Score

ChartMill utilizes a Health Rating to assess stocks, scoring them on a scale of 0 to 10. This rating takes into account a variety of liquidity and solvency ratios, both in absolute terms and in comparison to industry peers. NYSE:AOS has earned a 9 out of 10:

An Altman-Z score of 7.74 indicates that AOS is not in any danger for bankruptcy at the moment.
AOS has a better Altman-Z score (7.74) 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.
The Debt to FCF ratio of AOS (0.25) is better than 87.18% of its industry peers.
AOS has a Debt/Equity ratio of 0.06. This is a healthy value indicating a solid balance between debt and equity.
Looking at the Debt to Equity ratio, with a value of 0.06, AOS belongs to the top of the industry, outperforming 82.05% of the companies in the same industry.
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.

How do we evaluate the Profitability for 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:

Looking at the Return On Assets, with a value of 17.79%, AOS belongs to the top of the industry, outperforming 89.74% of the companies in the same industry.
The Return On Equity of AOS (29.28%) is better than 82.05% of its industry peers.
The Return On Invested Capital of AOS (24.35%) is better than 94.87% of its industry peers.
Measured over the past 3 years, the Average Return On Invested Capital for AOS is above the industry average of 13.33%.
The 3 year average ROIC (17.74%) for AOS is below the current ROIC(24.35%), indicating increased profibility in the last year.
The Profit Margin of AOS (14.41%) is better than 76.92% of its industry peers.
AOS's Operating Margin of 19.04% is fine compared to the rest of the industry. AOS outperforms 74.36% of its industry peers.
In the last couple of years the Operating Margin of AOS has grown nicely.
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.

Every day, new Best Dividend stocks can be found on ChartMill in our Best Dividend screener.

Check the latest full fundamental report of AOS for a complete fundamental analysis.

Keep in mind

Important Note: The content of this article is not intended as trading advice. It is essential to perform your own analysis and exercise caution when making trading decisions. The article presents observations created by automated analysis but does not guarantee any trading or investment outcomes. Always trade responsibly and make independent judgments.