Is NYSE:ETN suited for dividend investing?

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

Dividend Assessment of NYSE:ETN

To gauge a stock's dividend quality, ChartMill utilizes a Dividend Rating ranging from 0 to 10. This comprehensive assessment considers various dividend aspects, including yield, history, growth, and sustainability. NYSE:ETN has achieved a 7 out of 10:

• Compared to an average industry Dividend Yield of 2.24, ETN pays a better dividend. On top of this ETN pays more dividend than 88.76% of the companies listed in the same industry.
• ETN has paid a dividend for at least 10 years, which is a reliable track record.
• ETN has not decreased its dividend for at least 10 years, so it has a reliable track record of non decreasing dividend.
• 39.53% of the earnings are spent on dividend by ETN. This is a low number and sustainable payout ratio.
• ETN's earnings are growing more than its dividend. This makes the dividend growth sustainable.

Understanding NYSE:ETN'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:ETN has earned a 7 out of 10:

• An Altman-Z score of 5.45 indicates that ETN is not in any danger for bankruptcy at the moment.
• ETN has a better Altman-Z score (5.45) than 88.76% of its industry peers.
• The Debt to FCF ratio of ETN is 3.26, which is a good value as it means it would take ETN, 3.26 years of fcf income to pay off all of its debts.
• ETN has a Debt to FCF ratio of 3.26. This is in the better half of the industry: ETN outperforms 76.40% of its industry peers.
• ETN has a Debt/Equity ratio of 0.45. This is a healthy value indicating a solid balance between debt and equity.
• ETN 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.

Assessing Profitability for NYSE:ETN

ChartMill assigns a proprietary Profitability Rating to each stock. The score is computed by evaluating various profitability ratios and margins and ranges from 0 to 10. NYSE:ETN was assigned a score of 9 for profitability:

• Looking at the Return On Assets, with a value of 9.27%, ETN belongs to the top of the industry, outperforming 92.13% of the companies in the same industry.
• The Return On Equity of ETN (18.99%) is better than 92.13% of its industry peers.
• ETN has a Return On Invested Capital of 12.11%. This is amongst the best in the industry. ETN outperforms 88.76% of its industry peers.
• The last Return On Invested Capital (12.11%) for ETN is above the 3 year average (9.14%), which is a sign of increasing profitability.
• With an excellent Profit Margin value of 15.12%, ETN belongs to the best of the industry, outperforming 95.51% of the companies in the same industry.
• In the last couple of years the Profit Margin of ETN has grown nicely.
• The Operating Margin of ETN (18.57%) is better than 93.26% of its industry peers.
• ETN's Operating Margin has improved in the last couple of years.
• ETN has a Gross Margin of 37.53%. This is amongst the best in the industry. ETN outperforms 89.89% of its industry peers.
• In the last couple of years the Gross Margin of ETN has grown nicely.

More Best Dividend stocks can be found in our Best Dividend screener.

Our latest full fundamental report of ETN 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.