Updated 3/10/25
H.B. Fuller (NYSE: FUL) isn’t the kind of stock that grabs headlines, but for investors who value steady dividends and long-term consistency, it has a lot going for it. The company has been around since 1887, specializing in adhesives, sealants, and coatings. Its products are used across industries like packaging, construction, electronics, and transportation.
While the stock has seen some volatility, its commitment to shareholders remains strong. For dividend-focused investors, this is a company worth examining, especially given its long track record of returning cash to investors. Let’s break down its dividend metrics and overall financial health to see how it stacks up.
Key Dividend Metrics 📊
💰 Dividend Yield: 1.56%
📈 5-Year Average Yield: 1.15%
🔄 Dividend Growth Streak: 54 consecutive years
💵 Payout Ratio: 37.93%
📆 Most Recent Dividend Payment: $0.89 per share (February 20, 2025)
📅 Ex-Dividend Date: February 6, 2025
Dividend Overview
H.B. Fuller isn’t the highest-yielding stock out there, but its 1.56% yield is a step above its five-year average. That suggests the stock might be a bit undervalued compared to where it has historically traded.
The most impressive aspect of its dividend is consistency. With 54 years of consecutive increases, this company has proven it can weather economic downturns and still prioritize shareholders.
The payout ratio of 37.93% is right in the sweet spot—not too high to risk future cuts, but not so low that investors aren’t seeing meaningful returns. It suggests the company is keeping plenty of cash available for reinvestment while still rewarding shareholders.
Dividend Growth and Safety
One of the best things about FUL as a dividend stock is its stability. The company has a steady history of raising its dividend, even if the growth rate isn’t aggressive.
Cash flow is a big reason for this reliability. With operating cash flow at $302.44 million and free cash flow at $265.65 million, the dividend is well covered. There’s no immediate concern about its sustainability.
One potential concern is debt. The company carries $2.13 billion in total debt, with a debt-to-equity ratio of 116.5%. That’s not an immediate red flag, but it’s something to watch. If interest rates remain high, it could start to put some pressure on profitability, potentially limiting future dividend increases.
Chart Analysis
The chart for H.B. Fuller (FUL) paints a picture of a stock that has been in a clear downtrend for several months. Price action, moving averages, volume, and relative strength all suggest a market that has been favoring sellers over buyers. However, there are some signs worth analyzing to determine if conditions may be shifting.
Price Trend and Moving Averages
FUL has been trading below both its 50-day and 200-day moving averages, which is a textbook indicator of a bearish trend. The 50-day moving average has been sloping downward sharply, showing that shorter-term momentum has remained negative. The 200-day moving average is also declining, reinforcing the broader downtrend.
A key event on this chart is the death cross, where the 50-day moving average crossed below the 200-day moving average. This tends to signal that a longer-term downtrend is in play, and historically, it can take time for a stock to recover from this kind of setup.
Most recently, the stock found a short-term low and has bounced slightly off it. While this could be an early sign of stabilization, the price remains well below both moving averages, meaning the broader trend is still intact.
Volume and Buying Interest
Volume levels have been mixed throughout this decline. There were some major spikes in selling volume in December and October, indicating strong distribution during those periods. Since then, volume has remained somewhat steady but has not shown a clear surge in buying interest.
One thing to watch for would be a day with a significant increase in volume alongside a price move higher. That would indicate fresh buying interest entering the stock. So far, volume hasn’t confirmed that shift yet.
Relative Strength Index (RSI)
The RSI indicator at the bottom of the chart has been in oversold territory for an extended period, which means the stock has been under heavy selling pressure. However, the RSI appears to be trying to move higher from those extreme levels, which can sometimes indicate a potential rebound or at least a pause in the selling.
Despite this, an oversold RSI alone is not enough to suggest a reversal. Stocks can remain oversold for long periods, particularly in strong downtrends. It would be more convincing if RSI climbed back above the 30-40 level while the stock price started to form a base.
Recent Candle Patterns
Looking at the last five candles, the price has been finding some support around the $56 level, with the most recent candle closing at $57.05. There have been some lower wicks on the candles, which suggests buyers are stepping in at these lower levels. However, the upside movement has been fairly weak so far, and the stock hasn’t been able to sustain any strong rallies.
A bullish signal to watch for would be a strong green candle with high volume, potentially closing above a previous resistance level. Until then, the price action still suggests caution.
Analyst Ratings
H.B. Fuller has seen a mix of analyst opinions recently, reflecting both optimism and caution about its future prospects. Some analysts see potential in the company’s long-term strategy, while others are concerned about short-term challenges affecting margins and demand.
🔼 Upgrades
📈 January 2024 – A major investment firm adjusted its stance on H.B. Fuller, moving from a hold to a buy rating. The firm also set a price target of 85. This upgrade was driven by expectations of improved operational efficiencies and anticipated growth in key markets. Analysts highlighted the company’s ability to pass on costs to customers and maintain steady demand in packaging and industrial adhesives.
🔽 Downgrades
📉 March 2025 – Another firm downgraded H.B. Fuller from buy to neutral, citing concerns over increased tariffs and supply chain headwinds. These challenges are expected to weigh on demand, particularly in the transportation, new energy, and construction sectors, which make up a large portion of the company’s revenue.
📉 January 2025 – Another downgrade came when an investment bank lowered its rating from neutral to underweight, setting a price target of 52. Analysts pointed to rising competitive pressures in the hygiene, health, and consumable adhesives segment, suggesting potential difficulty in maintaining market share. They also flagged a slowdown in certain global markets, which could further impact revenue growth.
🎯 Consensus Price Target
🔹 The latest consensus among analysts is a hold recommendation.
🔹 The average price target currently sits around 68.60.
🔹 Analyst estimates range from a low of 60 to a high of 90.
Overall, analysts seem to recognize H.B. Fuller’s long-term strengths but remain cautious about near-term headwinds. While some firms see opportunity in the company’s ability to manage costs and maintain steady demand, others are wary of external factors like tariffs and increased competition that could pressure margins.
Earnings Report Summary
H.B. Fuller recently shared its latest earnings results, giving investors a clearer picture of how the company is performing and what to expect moving forward. The numbers show a mix of steady growth, some bumps along the way, and a few big moves aimed at streamlining operations for the future.
For the full year, the company pulled in $3.57 billion in revenue, a slight increase from the previous year. This was driven mostly by volume growth, though some price adjustments offset part of that gain. Gross margins came in at 29.8 percent, with an adjusted figure of 30.3 percent, showing a healthy improvement thanks to lower raw material costs and efficiency efforts.
Earnings were solid, with net income hitting $130 million for the year. Adjusted EBITDA, a key profitability measure, rose 2.2 percent to $594 million, with an improved margin of 16.6 percent. The company generated $301 million in operating cash flow, a reassuring sign that it has the financial flexibility to manage ongoing expenses and investments.
Looking at the most recent quarter, revenue landed at $923 million, up 2.3 percent from the same period last year. However, adjusted EBITDA slipped 14 percent to $148 million, and net income took a hit, partly due to a $38 million charge from the divestiture of its Flooring segment. On a per-share basis, earnings came in at $0.92 on an adjusted basis, but reported EPS showed a slight loss of $0.13 per share for the quarter.
Beyond the numbers, H.B. Fuller has been making moves to reshape its business. It recently restructured its Building and Construction segment into a new Building Adhesive Solutions unit and exited the Flooring business, a decision aimed at sharpening its focus. The company is also streamlining its supply chain, with plans to cut the number of manufacturing facilities from 82 to 55 by 2030 and consolidate North American warehouses down to about 10 by 2027. These steps are expected to generate about $75 million in annual cost savings once fully implemented.
Looking ahead, H.B. Fuller expects revenue to decline slightly in 2025 due to the Flooring business exit, but organic growth should remain flat to slightly positive. Adjusted EBITDA is forecasted to rise 1 to 5 percent, signaling cautious optimism.
Overall, the company is making strategic shifts while working through some near-term challenges. With a focus on cost efficiency and market repositioning, it’s taking steps to keep long-term growth on track.
Financial Health and Stability
H.B. Fuller operates in an industry that requires tight financial management, and its operating margin of 9.58% reflects that. It’s not a high-margin business, but it is stable.
Returns on capital are moderate, with a return on equity of 7.27% and a return on assets of 4.96%. While these numbers aren’t particularly exciting, they show that the company is making efficient use of its resources.
From a balance sheet perspective, the current ratio of 1.81 indicates that short-term liquidity isn’t a problem. However, the high debt load remains a concern. If borrowing costs increase or the company faces unexpected challenges, managing that debt could become a bigger issue.
On the revenue side, the company brought in $3.57 billion over the past year, but quarterly growth was only 2.3%. It’s clear that H.B. Fuller isn’t a high-growth stock—it’s more about steady, incremental gains.
Valuation and Stock Performance
At around $57.37 per share, H.B. Fuller is trading well below its 52-week high of $87.67. That’s a 28% decline, raising the question of whether it’s a buying opportunity or if there’s more downside ahead.
The trailing price-to-earnings (P/E) ratio is 24.8, which isn’t particularly cheap, but the forward P/E of 15.41 suggests that analysts expect earnings to improve. The price-to-book ratio of 1.69 also indicates that the stock is trading at a discount relative to its historical levels.
Looking at technical indicators, the 50-day moving average is at $61.48, while the 200-day moving average is much higher at $74.31. This tells us that the stock is still in a downward trend. Investors who use technical analysis might wait for a clearer sign of a reversal before jumping in.
One thing to note is the stock’s beta of 1.41, meaning it tends to be more volatile than the broader market. For income-focused investors looking for a smooth ride, that’s worth considering.
Risks and Considerations
No dividend stock is without risks, and H.B. Fuller is no exception.
1️⃣ Debt Levels – With more than $2 billion in debt and a debt-to-equity ratio above 100%, the company has some financial leverage. If interest rates stay high, this could start to weigh on profitability.
2️⃣ Economic Sensitivity – As an industrial supplier, H.B. Fuller’s business depends on demand from manufacturing, construction, and packaging. A slowdown in any of these sectors could hurt revenue.
3️⃣ Stock Price Volatility – The stock has already dropped significantly, and if earnings don’t improve, it could continue to face pressure.
4️⃣ Dividend Yield – While reliable, the current yield isn’t particularly high compared to other dividend-paying stocks. Investors seeking higher passive income might find better options elsewhere.
Final Thoughts
H.B. Fuller is the kind of stock that appeals to patient dividend investors who prefer reliability over excitement. With a decades-long history of dividend growth, a manageable payout ratio, and steady cash flow, it checks a lot of boxes for income-focused investors.
At the same time, there are challenges. The stock has fallen considerably, and its debt load is something to monitor. While the valuation appears reasonable, it’s not a screaming bargain, especially if economic conditions worsen.
For those who prioritize dividend consistency and long-term dependability, H.B. Fuller is worth a look. It may not be a high-yield stock, but its history of steady growth and financial discipline makes it a solid choice for investors looking for stable income with room for moderate appreciation.
Recent Comments