Updated 3/6/25
Cintas Corporation is a key player in the uniform and business services industry, catering to over a million businesses across North America. From corporate uniforms to fire safety products and first aid supplies, the company provides essential services that keep businesses running smoothly.
For dividend investors, Cintas stands out—not because of its high yield, but because of its steady and impressive dividend growth. This isn’t the kind of stock that delivers large dividend checks right away, but its long-term track record of increasing payouts makes it worth serious consideration. Let’s take a closer look at what makes Cintas a strong dividend stock.
Key Dividend Metrics
💰 Dividend Yield: 0.78%
📈 5-Year Dividend Growth Rate: 20.43%
💸 Payout Ratio: 35.08%
📆 Next Dividend Payment Date: March 14, 2025
📊 Ex-Dividend Date: February 14, 2025
📉 Dividend Safety: Strong, backed by consistent earnings and free cash flow
Dividend Overview
At first glance, the dividend yield on Cintas may not look exciting, sitting just below 1%. Some income investors might immediately pass it over in favor of stocks offering a higher yield. But focusing only on yield misses the bigger picture.
Cintas has a long history of rewarding investors by increasing its dividend at a rapid pace. Over the last five years, its dividend has grown by more than 20% annually. That kind of growth can turn a modest yield into a significant income stream over time, especially for investors who reinvest dividends or hold for the long term.
Adding to its appeal, Cintas recently completed a 4-for-1 stock split in September 2024. While stock splits don’t directly impact dividends, they make shares more accessible to smaller investors, which could drive more demand and long-term appreciation.
Dividend Growth and Safety
Dividend safety is one of the most important factors for long-term investors, and Cintas checks all the right boxes.
Why the Dividend Is Secure
✔ Low Payout Ratio – Only 35% of earnings go toward dividends, leaving plenty of room for reinvestment and future increases.
✔ Strong Cash Flow – The company generated $2.26 billion in operating cash flow over the last year, easily covering its dividend payments.
✔ Resilient Business Model – Businesses need uniforms, safety gear, and workplace essentials no matter what’s happening in the economy.
Cintas has proven its ability to increase dividends even during economic downturns. Given its financial strength, investors can expect more dividend hikes in the coming years, potentially in the range of 10-15% annually.
Chart Analysis
Price Action and Moving Averages
The price chart for Cintas (CTAS) shows a strong uptrend for most of the past year, with the stock steadily climbing above both its 50-day and 200-day moving averages. However, there was a significant breakdown in the trend around late December, where the price dipped sharply below both moving averages before recovering.
Currently, the stock is hovering near the 50-day moving average, which has flattened out and even turned slightly downward. Meanwhile, the 200-day moving average is still trending upward, indicating that the longer-term bullish momentum hasn’t completely faded. The price action in recent weeks suggests some hesitation, as the stock has failed to make new highs and is now testing support near the moving averages.
Volume and Market Participation
Volume activity has been relatively stable for most of the year, with occasional spikes. One of the most noticeable volume surges occurred around July, which coincided with a sharp price jump. More recently, there has been no major surge in volume, suggesting that traders are not rushing in aggressively at current price levels.
The most recent dip in price was not accompanied by a dramatic increase in volume, which could indicate that selling pressure was not excessive. However, for a strong recovery, the stock may need renewed buying interest with higher-than-average volume.
Relative Strength Index (RSI)
The RSI is currently around 60, suggesting that the stock is in a neutral to slightly overbought range. It has recovered from oversold levels seen a few months ago, but it has not yet reached extreme overbought conditions. This implies that while the stock has regained some strength, it does not have a clear directional bias at this moment.
Recent Candle Patterns and Price Behavior
The last five candles indicate some indecision in the market. There have been small-bodied candles with both upper and lower wicks, signaling that buyers and sellers are in a tug-of-war. The most recent candle shows a slight pullback, but it is not an aggressive selling signal.
If the stock can hold near the moving averages and push higher with stronger volume, it could confirm a continuation of the uptrend. On the other hand, a break below the 200-day moving average could signal further downside ahead.
Analyst Ratings
Cintas Corporation (CTAS) has received a mix of upgrades and downgrades recently, reflecting both optimism about its growth and some caution over valuation concerns. The current consensus rating is Hold, with an average price target of $199.79, suggesting limited upside from its recent trading price.
📈 Recent Upgrades
🔹 Barclays raised its price target on Cintas from $210 to $245 while maintaining an Overweight rating. Analysts pointed to strong earnings growth, robust cash flow, and the company’s ability to increase prices without significantly affecting demand. Cintas’ recurring revenue model and essential business services were cited as key factors supporting long-term stability.
🔹 UBS also revised its outlook, increasing the price target from $219 to $240. UBS analysts highlighted continued margin expansion and efficiency improvements as potential drivers of future profitability. They also noted the company’s reliable dividend growth as a factor in maintaining a positive rating.
📉 Recent Downgrades
🔻 Baird downgraded Cintas from Outperform to Neutral, citing concerns about valuation. With the stock trading at a high price-to-earnings ratio, analysts believe much of its future growth potential is already reflected in the current share price, making further upside less likely.
🔻 RBC Capital shifted its rating from Outperform to Sector Perform, suggesting that while Cintas remains a strong company, its stock may not significantly outperform the broader market in the near term. Analysts pointed to rising labor costs and potential economic headwinds that could put pressure on profit margins.
These mixed ratings highlight a key theme—while Cintas remains financially solid and continues to execute well, some analysts see the stock as fairly valued at current levels, while others still view room for additional growth.
Earnings Report Summary
Cintas Corporation recently released its latest earnings report, and the numbers show that the company continues to move in the right direction. Business is growing, profitability is improving, and management remains optimistic about the future.
Strong Revenue Growth
The company brought in $2.56 billion in revenue for the quarter, which is up 7.8% from the same time last year. That kind of growth is a good sign, showing that demand for Cintas’ services remains steady. The company’s ability to expand its customer base and maintain strong retention has helped drive these higher revenues.
Better Margins and Increased Profitability
Profitability improved as well. Gross margin came in at $1.28 billion, which is an 11.8% increase over last year’s numbers. Even more impressive is the fact that the gross margin percentage climbed to 49.8%, meaning Cintas is keeping more of each dollar earned. That suggests the company is managing costs efficiently and benefiting from pricing power in the market.
Operating income also saw a significant jump, rising 18.4% to $591.4 million. The company’s operating margin expanded to 23.1%, up from 21.0% last year, which tells us that Cintas is running its operations more effectively.
Net income hit $448.5 million, an increase of 19.7%, and earnings per share (EPS) climbed 21.1% to $1.09. This kind of EPS growth is great news for investors, as it means the company is not just making more money, but also delivering higher returns per share.
Another Dividend Increase
Cintas remains committed to rewarding shareholders, as evidenced by its latest dividend payout of $158 million. That’s a 14.9% increase from the same quarter last year. For income-focused investors, this steady dividend growth is exactly what they like to see.
Updated Guidance Shows Confidence
Looking ahead, the company slightly raised its full-year revenue guidance, now expecting between $10.255 billion and $10.320 billion. Earnings per share projections were also increased to $4.28 – $4.34, reflecting confidence in continued profitability.
Cintas’ latest report makes it clear that the company is firing on all cylinders. With steady revenue growth, improved margins, and rising dividends, management’s optimism seems well-founded.
Financial Health and Stability
Cintas is in a strong financial position, which is a key reason why it can continue to grow its dividend. The company’s return on equity is an impressive 41.32%, meaning it generates substantial profits relative to shareholder investment.
Financial Highlights
- Profit Margin: 17.23%
- Operating Margin: 23.08%
- Total Debt: $2.85 billion
- Current Ratio: 1.58
While Cintas does carry some debt, its cash flow generation is more than enough to manage it. The company also has a history of disciplined financial management, keeping its balance sheet strong while investing in future growth.
Valuation and Stock Performance
Cintas has been a stellar performer in the market, delivering strong stock price appreciation over the years. But that success comes at a price—its valuation is on the higher side.
- 52-Week High: $228.12
- 52-Week Low: $154.15
- Price-to-Earnings (P/E): 48.37
- Price-to-Book (P/B): 18.86
The stock trades at a forward P/E of 42.37, which is higher than many other dividend stocks. This suggests that investors have high expectations for its future growth. While it may not be cheap, quality companies rarely are.
For long-term investors, valuation should be considered, but it shouldn’t be the only deciding factor. Cintas has consistently delivered strong earnings and dividend growth, justifying a premium price compared to slower-growing companies.
Risks and Considerations
Every investment has risks, and Cintas is no exception.
📉 High Valuation – With a P/E above 40, any earnings disappointment could lead to a sharp decline.
💰 Low Starting Yield – The yield is below 1%, so investors must rely on dividend growth rather than immediate income.
📊 Economic Sensitivity – While Cintas’ services are essential, downturns in business activity could still impact its revenue.
📈 Rising Costs – Higher labor and material costs could put pressure on profit margins, though Cintas has pricing power to offset some of this.
Final Thoughts
Cintas is not a traditional high-yield dividend stock, but for those who prioritize dividend growth, financial strength, and long-term appreciation, it’s a compelling choice. The company has a history of increasing its dividend at an impressive rate, and its low payout ratio suggests there’s plenty of room for that trend to continue.
For investors willing to trade a higher current yield for long-term growth, Cintas is worth considering—especially on market pullbacks. It’s a steady, well-managed business that has consistently delivered for its shareholders, and there’s little reason to believe that will change anytime soon.
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