Updated 3/5/25

Applied Industrial Technologies (NYSE: AIT) may not be the flashiest name in the stock market, but it’s a solid, behind-the-scenes player in the industrial sector. The company specializes in distributing motion, fluid power, and automation technologies—critical components for manufacturing and industrial operations.

AIT has quietly built a strong reputation over the years, and its stock has performed well, recently hitting a high of $282.98 before pulling back. But for dividend investors, stock price alone isn’t the main focus. The real question is: Does this company offer a stable, growing income stream? Let’s take a closer look.

🔑 Key Dividend Metrics

💰 Forward Dividend Yield: 0.79%
📈 5-Year Average Dividend Yield: 1.24%
💲 Annual Dividend Rate: $1.84 per share
📆 Most Recent Dividend Date: February 28, 2025
⚖️ Payout Ratio: 14.98% (Low and sustainable)
📉 Dividend Growth Streak: 14+ years

AIT isn’t a stock that pays a high dividend, but it has a track record of consistency and responsible dividend management.

Dividend Overview

For investors looking for big dividend checks, AIT might not be the first pick. With a dividend yield of just 0.79%, it pays significantly less than other industrial sector stocks. However, a low yield isn’t always a bad thing—it often means a company is prioritizing growth while still rewarding shareholders along the way.

One of the standout features of AIT’s dividend is its extremely low payout ratio of just 14.98%. This means the company retains most of its earnings for reinvestment, ensuring future growth while still leaving room for dividend increases.

AIT has also been incredibly consistent with dividend increases, maintaining a streak of more than 14 consecutive years of hikes. While it’s not yet in Dividend Aristocrat territory, it’s certainly on the right track.

Dividend Growth and Safety

Dividend investors often look for two key things: steady growth and safety. AIT delivers both.

The company has a history of raising its dividend at a healthy pace, with growth rates typically in the high single digits over the past decade. And with such a low payout ratio, there’s no immediate concern about a dividend cut, even if earnings were to dip in a recession.

Another big plus is AIT’s strong cash flow. The company generated $426.31 million in operating cash flow and $302.25 million in free cash flow over the past year. That’s more than enough to cover its dividend obligations multiple times over.

Chart Analysis

The chart for Applied Industrial Technologies (AIT) shows a strong uptrend over the past year, with some recent weakness as the stock pulls back from its highs. The 50-day moving average (orange line) had been acting as a support level for much of the rally, but the stock has now broken below it. Meanwhile, the 200-day moving average (blue line) is still trending upward, suggesting that the long-term trend remains intact despite the short-term pullback.

Looking at price action, the stock recently hit a high above $275 before selling pressure brought it back down toward the $230 range. This kind of retracement isn’t unusual after a strong run-up, but it does signal a shift in momentum. The fact that the price dipped below the 50-day moving average and hasn’t immediately bounced back raises the possibility of further consolidation.

Volume levels don’t indicate panic selling, but they do show an increase in trading activity as the stock pulls back. That suggests a mix of profit-taking and potential new buyers stepping in. However, without a strong rebound, this could lead to more sideways movement or even a retest of lower support levels.

The Relative Strength Index (RSI) is also worth noting. It peaked well into overbought territory during the big rally but has since cooled off. Right now, it’s hovering in the middle range, neither overbought nor oversold, meaning the stock isn’t at an extreme in either direction. If RSI drops closer to the oversold threshold (below 30), that could indicate a potential buying opportunity.

For now, AIT appears to be in a corrective phase after a strong bullish trend, with the 200-day moving average as a key level to watch for support.

Chart Analysis

Apple’s stock has been in an overall uptrend for the past year, but there are some interesting movements happening in the more recent price action. The stock is currently trading around $235.74, after experiencing a bit of a pullback from its recent highs.

One of the most notable things in this chart is the interaction between the 50-day and 200-day moving averages. The 50-day moving average (orange line) has been acting as dynamic support for much of the uptrend, but recently, the price has dipped below it, suggesting some short-term weakness. The 200-day moving average (blue line), however, remains in an upward trajectory, which typically signals that the longer-term trend is still intact.

The recent price movement shows some choppy trading with a lower high formation, which could indicate a period of consolidation. The stock has bounced off support levels before, but the volume suggests that selling pressure has increased in recent weeks.

Looking at the volume bars, there was a notable spike in selling volume around October, followed by a recovery. The recent pullback doesn’t seem to have the same level of panic selling, but the volume is something to keep an eye on. If it starts picking up on down days, it could signal a larger trend shift.

The Relative Strength Index (RSI) at the bottom of the chart shows that the stock was in overbought territory in recent months but has now cooled off. The RSI has dipped but is still staying above the midpoint, which means momentum hasn’t completely turned bearish yet. If it drops below 40, that might suggest a stronger shift in sentiment.

For now, the stock is hovering around key levels. If it can reclaim the 50-day moving average, the uptrend could resume. However, if it starts drifting toward the 200-day moving average, it could indicate that the stock needs more time to reset before making another move higher.

Analyst Ratings

Applied Industrial Technologies (AIT) has recently seen a mix of upgrades and downgrades, reflecting a range of analyst opinions on its future performance.

📈 Upgrades:

• 🔵 Bank of America Securities 🏦 On November 26, 2024, analyst Sabrina Abrams upgraded AIT from Hold to Strong Buy, raising the price target from $285 to $315. The upgrade was driven by strong financial performance and an optimistic growth outlook.
• 🟢 Oppenheimer 📊 Analyst Christopher Glynn maintained an Outperform rating on November 14, 2024, and increased the price target from $260 to $305. The firm cited AIT’s solid earnings growth and improving industry demand.
• 🟠 KeyBanc 💡 On December 3, 2024, analyst Ken Newman reaffirmed a Buy rating and adjusted the price target upward from $275 to $325. Analysts believe AIT’s market position and strategic investments will drive future gains.

📉 Downgrades:

• 🔴 StockNews.com ❗ On January 23, 2025, the firm downgraded AIT from Buy to Hold, signaling a more neutral stance. The downgrade came as analysts flagged potential risks related to slowing revenue growth.
• ⚪ BofA Securities 📉 Initially, on October 7, 2024, analyst Sabrina Abrams initiated coverage with a Hold rating and a price target of $232, reflecting a more cautious outlook at that time.

📊 Consensus Price Target: The latest analyst consensus puts AIT’s average price target at $289.38, with estimates ranging from $265 to $325. This suggests a potential upside of 15.48% from the current stock price of $250.58.

🔍 These differing opinions show the dynamic nature of AIT’s market outlook. While some analysts see continued growth, others remain cautious due to potential industry headwinds.

Earnings Report Summary

Applied Industrial Technologies (AIT) just released its latest earnings report, and while there were a few bumps, the overall picture remains solid. The company brought in $1.1 billion in sales for the quarter ending December 31, 2024. That’s a slight dip of 0.4% compared to the same time last year, but the numbers tell a more interesting story when you dig deeper.

On the positive side, acquisitions helped boost revenue by 1.9%, and an extra selling day added another 1.6% to the total. But despite these gains, organic sales slipped by 3.4%, which suggests that underlying demand softened a bit. The Service Center segment held up better with just a 1.9% decline, while the Engineered Solutions segment saw a steeper drop of 6.3%.

Even with the slight sales decline, AIT managed to increase its profits. The company reported $93.3 million in net income, with earnings per share coming in at $2.39—a 6.7% jump from the previous year’s adjusted figure. EBITDA also edged up 3.3% to $135.1 million, showing that AIT is keeping expenses in check and operating efficiently.

One of the highlights from this report was cash flow. The company pulled in $95.1 million in operating cash flow and had $89.9 million in free cash flow, which is always a good sign for long-term stability. That strong cash position is likely why AIT felt confident enough to raise its quarterly dividend by 24%, bringing it up to $0.46 per share.

Looking ahead, AIT adjusted its full-year guidance to reflect its recent acquisition of Hydradyne. The company now expects earnings per share to land between $9.65 and $10.05, with sales growth of 1% to 3%. EBITDA margins are projected to stay healthy, coming in somewhere between 12.2% and 12.4%.

Overall, the report shows a company that’s navigating some short-term softness in sales while still growing profits and keeping shareholders happy with a bigger dividend. AIT isn’t immune to industry headwinds, but it’s proving it can adapt and keep delivering solid results.

Financial Health and Stability

A strong dividend requires a solid financial foundation, and AIT checks most of the right boxes.

The company has an operating margin of 11.26% and a net profit margin of 8.62%, both solid figures that indicate efficiency. It also boasts a return on equity (ROE) of 22.7%, meaning it’s generating strong returns on shareholder capital.

Debt is always something to watch, but AIT’s financial position looks healthy. The company carries a debt-to-equity ratio of 31.91%, which is manageable given its strong cash flow. With $303.44 million in cash on hand, it has plenty of liquidity to handle any short-term challenges.

Valuation and Stock Performance

AIT’s stock has been on a strong run, moving from a 52-week low of $177.68 to a high of $282.98. Even after pulling back, it’s still trading above its 200-day moving average of $226.98, which suggests underlying strength.

From a valuation standpoint, it’s not a screaming bargain, but it’s not overly expensive either. The trailing price-to-earnings (P/E) ratio sits at 23.56, while the forward P/E is slightly lower at 21.55. These figures indicate the stock is trading at a reasonable price relative to its earnings potential.

One important metric for long-term investors is the PEG ratio, which measures valuation against expected growth. AIT’s PEG ratio of 2.16 suggests it may not be the fastest-growing stock, but it still has room for future earnings expansion.

Risks and Considerations

Every stock comes with risks, and AIT is no exception.

Since the company operates in the industrial sector, it’s highly sensitive to economic cycles. A slowdown in manufacturing or automation spending could impact earnings. Recent revenue growth has already slowed slightly, with the most recent quarter showing a 0.40% decline year-over-year. While this isn’t a major red flag, it’s worth keeping an eye on.

Another thing to consider is the relatively low dividend yield. Investors looking for high immediate income may find better options elsewhere. AIT is more of a long-term dividend growth play rather than an income stock.

Final Thoughts

Applied Industrial Technologies is a great example of a reliable, low-yield dividend growth stock. While it may not provide the highest payout today, its steady increases, strong financials, and low payout ratio make it a safe choice for long-term investors who value dividend consistency.

For those looking for a stock with a growing income stream backed by a well-run business, AIT is certainly worth watching.