| | | Re: Recent Dividend Increase - Part 2 GPC (currently owned)
Genuine Parts Company (GPC).
Genuine Parts just increased its dividend by 6.1%. Okay. Not the biggest dividend increase in today’s group. Still, it is more money. What Genuine Parts might lack in terms of huge growth, they more than make up for in terms of incredible consistency.
The automotive parts company has now increased its dividend for 67 consecutive years.
Wow. As someone who loves to own businesses that can demonstrate the ability to reliably increase dividends over the course of decades, I absolutely adore this track record. It’s one of the best out there.
The 10-year DGR of 6.1% is yet another hallmark of the legendary consistency. That lines up pretty nicely with this most recent dividend raise. The stock’s yield of 2.1% is a bit lower than I’d like to see it. Then again, based on the midpoint of FY 2023 adjusted EPS, the payout ratio of 42.8% indicates that this dividend will be increased in about a year’s time yet again. Just like clockwork.
So much to like about Genuine Parts, except the valuation. Love the company’s commitment to dividend increases, year in and year out, no matter what. Even among fellow Dividend Aristocrats, Genuine Parts is royalty. It exists in rarefied air.
Unfortunately, that kind of quality is commanding a hefty premium right now. Just about every valuation metric I look at is well above its respective recent historical average. The P/CF ratio of 17.4 is quite a bit higher than its own five-year average of 13.1. On the other hand, using that aforementioned adjusted EPS guidance for the coming fiscal year, the forward P/E ratio is 20.2.
Source: Jason Fieber |
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