Updated 3/6/25
Badger Meter, Inc. (BMI) isn’t the kind of stock that grabs headlines, but for those who value steady returns and long-term reliability, it deserves a closer look. The company has been a leader in water metering and flow measurement solutions for decades, helping municipalities and businesses manage water resources efficiently.
With water conservation becoming more important and infrastructure investments rising, BMI finds itself in a strong position for continued growth. But for dividend investors, the real question is whether it offers enough stability, income, and growth potential to make it worth holding in a long-term portfolio.
Let’s break down the key factors that matter most.
🔑 Key Dividend Metrics
📌 Dividend Yield: 0.65%
📌 Annual Dividend Rate: $1.36
📌 Payout Ratio: 28.84% (healthy and sustainable)
📌 5-Year Average Dividend Yield: 0.75%
📌 Dividend Growth Streak: Over 30 years of consecutive increases
📌 Next Dividend Date: March 14, 2025
📌 Ex-Dividend Date: February 28, 2025
Dividend Overview
Badger Meter isn’t a high-yield stock, and that’s not necessarily a bad thing. With a dividend yield of 0.65%, it falls on the lower end of the spectrum compared to other dividend-paying companies. But what it lacks in yield, it makes up for in consistency. The company has been rewarding investors with dividend increases for over 30 years, proving its commitment to long-term shareholder returns.
One of the most reassuring aspects of BMI’s dividend policy is its conservative payout ratio. At just 28.84%, the company is only using a small portion of its earnings to fund dividends, leaving plenty of room for reinvestment and future dividend hikes. This makes it a safer bet for those who want steady income without worrying about dividend cuts during economic downturns.
Dividend Growth and Safety
Badger Meter’s dividend story isn’t just about reliability—it’s about growth. Over the past five years, the company has increased its dividend at an average annual rate of around 10%. That kind of growth can turn a small dividend yield into a much larger payout over time.
For investors who focus on dividend safety, BMI checks all the right boxes. The company generates strong free cash flow, bringing in $114.39 million in levered free cash flow over the past year. That’s more than enough to cover its dividend payments with room to spare.
Debt levels are also incredibly low, with just $6 million in total debt. That means BMI isn’t weighed down by interest payments, making its dividend even more secure.
Chart Analysis
Price Action
Badger Meter (BMI) has been in a strong uptrend for most of the past year, but momentum appears to be fading. The stock hit a peak above $225 before pulling back and now hovers around $210.06. There’s been some sideways movement over the past few months, with price action struggling to break above prior highs.
Today’s trading session saw a high of $210.44 and a low of $205.72, with the stock closing near the midpoint at $210.06. That suggests neither buyers nor sellers had total control, which aligns with the broader consolidation pattern.
Moving Averages
The 50-day moving average (orange line) is starting to flatten out and slightly roll over, which can indicate short-term weakness. Meanwhile, the 200-day moving average (blue line) continues to trend higher, signaling that the longer-term trend remains intact.
The stock recently tested the 50-day moving average from below but failed to hold above it. If BMI can reclaim this level with strong volume, it could suggest buyers are stepping back in. Otherwise, the 200-day moving average around $200 could act as stronger support if selling pressure increases.
Volume Trends
Volume in recent weeks has been moderate, but there were a few spikes during sell-offs, particularly in late October and early December. Today’s volume of 155,392 shares is in line with recent averages, showing no major signs of panic or aggressive accumulation.
The lack of a strong volume surge alongside price movement suggests investors are waiting for more direction. If volume picks up alongside a move above the 50-day moving average, it would add confidence to an upside breakout. Conversely, heavier selling volume could push the stock lower toward its 200-day support.
RSI and Momentum
The relative strength index (RSI) is sitting in neutral territory, neither overbought nor oversold. This reinforces the idea that BMI is in a period of consolidation, with no extreme buying or selling pressure at the moment.
Previously, RSI peaked in the overbought zone around November before cooling off. If it starts trending back toward 70, it could indicate renewed bullish momentum. On the flip side, a drop below 40 might signal that sellers are gaining control.
Recent Candlestick Patterns
The past five trading days have shown mixed signals, with small-bodied candles reflecting indecision. Some wicks on both ends of the candles suggest both buyers and sellers have been active, but no clear trend has emerged.
One key area to watch is whether BMI can hold above the $205–$210 range, where it has found some support recently. A decisive break below could lead to further downside, while a push above $215 could signal renewed strength.
Analyst Ratings
Badger Meter (BMI) has recently been the subject of various analyst evaluations, reflecting a range of perspectives on the company’s performance and future prospects.
Upgrades
📈 On February 3, 2025, Maxim Group raised its price target for Badger Meter from $235 to $245, maintaining a strong buy rating. The firm cited continued revenue growth, strong demand in the water infrastructure market, and consistent margin expansion as key factors in their decision. Analysts highlighted the company’s ability to leverage its technology in smart metering solutions as a competitive advantage.
Downgrades
📉 On September 29, 2023, Northcoast Research downgraded Badger Meter from hold to strong sell due to valuation concerns. At the time, the stock had experienced significant price appreciation, pushing its price-to-earnings ratio well above historical averages. Analysts expressed concerns that the growth rate might slow, leading to a potential revaluation of the stock.
Consensus Price Target
📊 The current consensus among analysts is a hold rating for BMI, with an average twelve-month price target of approximately $218.75. This suggests a moderate upside from current levels but also reflects cautious optimism. Some analysts maintain higher targets based on growth potential, while others remain conservative due to valuation risks and overall market conditions.
📌 These diverse analyst perspectives highlight the importance of considering both growth potential and valuation concerns when evaluating Badger Meter as an investment.
Earning Report Summary
Badger Meter wrapped up its latest quarter on a strong note, delivering solid numbers across the board. The company continues to benefit from steady demand for its smart water solutions, and the latest earnings report reflects just that.
Fourth Quarter Performance
Revenue came in at $208.4 million for the quarter, marking a 12% jump from the same period last year. That growth was fueled by ongoing adoption of its water management technology, particularly among utilities looking to modernize their infrastructure.
Operating profits saw a healthy boost as well, climbing 22% year-over-year. Profit margins expanded to 19.5%, thanks to a combination of strong sales and better cost control. That efficiency translated into earnings per share of $1.08, up 23% from the prior year.
Cash flow was another bright spot, with the company generating $45.1 million in operating cash—an impressive 43% increase. This kind of cash flow gives Badger Meter more flexibility to invest in growth while continuing to reward shareholders.
Full-Year Highlights
Zooming out to the full year, total revenue hit $826.6 million, a solid 17% increase from last year. Much of that came from the growing demand for the company’s smart water metering and analytics solutions.
Earnings were equally strong, with net income reaching $124.9 million and earnings per share rising to $4.23. These figures highlight the company’s ability to drive growth while keeping expenses under control.
Operating cash flow for the year topped $155 million, further strengthening the company’s financial position. Given this performance, it wasn’t a surprise when Badger Meter bumped up its dividend by 26%, continuing its three-decade streak of increases.
Business Developments
One of the biggest drivers of growth has been the company’s smart water solutions. Sales in the utility water segment jumped 14% as more cities and municipalities adopted Badger Meter’s technology to monitor water usage and improve efficiency.
Meanwhile, its flow instrumentation business was relatively flat. While demand for water-related applications remained stable, other industrial markets were a bit more sluggish.
On the acquisition front, the company made a strategic move by acquiring Hadronex, a sewer and lift station monitoring provider, for $185 million. This deal expands Badger Meter’s footprint in the wastewater sector, adding another layer of growth potential.
Looking Ahead
The company remains optimistic about the future, expecting steady growth driven by continued investment in water infrastructure. Management sees room for operating margin expansion as pricing strategies and product mix improvements take hold.
With a strong balance sheet and a business positioned in a high-demand industry, Badger Meter looks to keep building on its momentum in the coming quarters.
Financial Health and Stability
A strong balance sheet is the foundation of any solid dividend stock, and Badger Meter excels in this area. The company is nearly debt-free and holds $295.3 million in cash, giving it financial flexibility that many companies don’t have.
Key financial highlights:
- Operating cash flow: $155.03M
- Return on Equity (ROE): 22.26%
- Return on Assets (ROA): 12.87%
- Current Ratio: 4.57
These numbers paint a picture of a well-run company that manages its resources efficiently. A high return on equity shows that BMI is making smart use of shareholder capital, while a strong current ratio indicates that it has plenty of liquidity to cover short-term obligations.
This financial strength means Badger Meter isn’t just a stable dividend payer—it’s also positioned for long-term growth.
Valuation and Stock Performance
Badger Meter has been on a strong run over the past year, with its stock trading between $150.87 and $239.11. Right now, shares sit around $209, which is close to the 200-day moving average of $207.17. This suggests the stock is in a fair trading range but not necessarily at a discount.
From a valuation standpoint, BMI isn’t cheap.
- Trailing P/E: 49.69
- Forward P/E: 44.25
- Price/Sales: 7.51
- Price/Book: 10.20
These numbers indicate that investors are paying a premium for BMI shares. Part of the reason for this is its strong earnings growth—quarterly earnings are up 24.3% year-over-year, and revenue has climbed 12.5%. Investors tend to pay up for companies with steady growth and minimal risk, which explains why BMI trades at higher multiples.
One factor working in its favor is its relatively low beta of 0.82. That means it tends to be less volatile than the broader market, making it a good option for investors who want stability during market downturns.
Risks and Considerations
While Badger Meter has plenty of positives, there are a few things investors should keep in mind before jumping in.
Low Dividend Yield
For income-focused investors, BMI’s 0.65% dividend yield might not be enough. If the goal is to maximize passive income, there are many other stocks offering higher yields.
High Valuation
BMI isn’t cheap, and buying at high valuations always comes with the risk of a pullback. If growth slows or the market conditions change, the stock price could take a hit.
Industry Exposure
The company’s success is closely tied to municipal water infrastructure spending. If government budgets tighten or infrastructure projects are delayed, demand for Badger Meter’s products could slow down.
Interest Rate Sensitivity
High-valuation stocks like BMI are often impacted by rising interest rates. When rates go up, investors sometimes move money away from stocks with high price-to-earnings ratios and into safer, income-generating assets.
Final Thoughts
Badger Meter may not offer the highest yield, but it makes up for it with financial strength, consistent dividend growth, and a history of rewarding investors. Its low debt, strong cash flow, and conservative payout ratio all point to a safe and sustainable dividend for the long haul.
For those who prioritize dividend growth and safety over immediate yield, BMI is a strong contender. However, its high valuation and modest current yield mean it may not be the best fit for income-focused investors looking for a higher payout.
Long-term investors who believe in BMI’s growth potential and want a dependable dividend stock might find it to be a great addition to their portfolio. Those looking for higher yields might need to look elsewhere. Either way, Badger Meter’s track record of steady growth and financial discipline makes it a company worth watching.
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