The company has managed to grow dividends for 12 years in a row. The last dividend increase occurred in November 2022, when Snap-on’s Board of Directors hiked its quarterly dividend by 14% to $1.62/share. Over the past decade, the company has managed to boost its dividends at an annualized rate of 14.70%.
Snap-on has managed to grow earnings per share significantly during the past decade. Between 2011 and 2021, earnings per share grew roughly three-fold from $4.71 to $14.92. The company is expected to generate $15.27/share in 2022 and $16.14/share in 2023.
The number of shares outstanding has stayed in a rather constant range over the past decade. The past three years have been a positive surprise. I would expect more in share repurchases over the next decade, in order to juice up the slow-down in organic earnings per share growth.
The dividend payout ratio has consistently stayed a little below 30% over the past decade, with the brief spike during the financial crisis and the Covid crisis. A consistent payout ratio is good to see, as it shows that earnings and dividends tend to move in lockstep over the long-term. A lower payout ratio also offers some added margin of safety to insulate the distributions during any temporary bumps in earnings during recessions.
Currently, Snap-On is attractively valued at 16.50 times forward earnings, and yields 2.83%.
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