3/10/25

IDEX Corporation (NYSE: IEX) may not be a name you hear every day, but it plays a crucial role in the industrial sector. The company specializes in highly engineered solutions for niche industries like fluid and metering technologies, health and science, and fire and safety. With a solid reputation and a history of steady performance, IDEX has built a track record as a dependable dividend payer.

At a market cap of $14.22 billion, the company isn’t the biggest industrial player, but it stands out for its strong margins and disciplined capital allocation. For dividend investors, it offers a blend of steady growth and financial stability. Let’s take a closer look at how it measures up for those focused on long-term income.

📊 Key Dividend Metrics

💰 Dividend Yield: 1.47%
📈 5-Year Average Yield: 1.13%
🔁 Consecutive Dividend Increases: 13 years
🚀 5-Year Dividend Growth Rate: ~8.5%
🎯 Payout Ratio: 40.81%
📅 Last Dividend Payment: January 31, 2025
⚠️ Ex-Dividend Date: January 17, 2025

Dividend Overview

For investors looking for consistency, IDEX delivers. The company has increased its dividend for 13 consecutive years, demonstrating a strong commitment to rewarding shareholders.

At 1.47%, the current yield isn’t particularly high, but it’s backed by steady growth. Over the past five years, IDEX has increased its dividend at an annualized rate of 8.5%, which helps offset the lower starting yield. For those reinvesting dividends or holding for the long haul, that kind of growth adds up.

Another positive sign is the payout ratio, which sits at 40.81%. This suggests that the company is using less than half of its earnings to pay dividends, leaving plenty of room for reinvestment, debt reduction, or future increases.

Dividend Growth and Safety

IDEX is a strong example of a company that balances dividend payments with long-term growth. While some companies stretch their payout ratios too thin to keep up appearances, IDEX remains disciplined, ensuring that its dividend is both sustainable and positioned to grow.

The most recent dividend hike was 8.7%, in line with historical increases. Free cash flow is another strong point, with the company generating $513.91 million in levered free cash flow over the last year. That means there’s ample flexibility to continue raising dividends without putting pressure on financials.

With a healthy balance sheet and strong profitability metrics, IDEX’s dividend is well-protected.

Chart Analysis

Overall Trend

The stock has been in a downtrend over the past several months, with a sharp decline from its highs above $240 to its current level around $187.66. The 50-day moving average (blue line) recently crossed below the 200-day moving average (purple line), which is often referred to as a death cross—a bearish technical signal indicating potential further downside.

Moving Averages

The 50-day moving average has been sloping downward for some time, reflecting shorter-term selling pressure. The 200-day moving average had been relatively flat but is now starting to turn lower, confirming the broader weakness in price action. Typically, when the shorter moving average stays below the longer-term average, it suggests a continuation of the downward trend.

Volume Activity

Volume has been relatively steady except for a few spikes. A notable surge occurred around October, suggesting significant buying or selling activity at that time. However, recent volume levels do not show strong accumulation, which means that buyers are not stepping in aggressively at these lower prices yet.

RSI and Momentum

The Relative Strength Index (RSI) has been in the lower range, hovering below 50, which indicates weak momentum. It is not quite in oversold territory (below 30), but it does suggest a lack of strong buying interest. If RSI starts to push back above 50, it could indicate that the stock is stabilizing or attempting a reversal.

Recent Price Action

The last few trading sessions have seen a mix of lower highs and lower lows, which confirms the continued weakness. However, the latest close at $187.66 shows some resilience after hitting a low of $183.95 earlier in the session. This could indicate potential support in this area, though more confirmation is needed.

Analyst Ratings

In recent months, IDEX Corporation (NYSE: IEX) has seen a mix of analyst upgrades and downgrades, reflecting different perspectives on its outlook. The consensus 12-month price target among analysts stands at approximately $241.71, indicating potential upside from current levels.

🔼 Upgrades

📈 Stifel Nicolaus – On December 11, 2024, Stifel raised its price target from $244 to $256 while keeping a buy rating. The firm cited strong earnings growth and resilient demand across IDEX’s core industrial markets as key reasons for the upgrade.

💰 Citigroup – On January 13, 2025, Citi adjusted its price target slightly from $269 to $267, reaffirming its buy rating. Analysts pointed to consistent free cash flow generation and strategic acquisitions that could drive long-term growth.

🔽 Downgrades

⚖️ DA Davidson – On February 19, 2025, DA Davidson lowered its price target from $225 to $215, maintaining a neutral rating. The downgrade stemmed from concerns about softening industrial demand and margin pressures, which could impact profitability in the near term.

📉 Royal Bank of Canada (RBC) – On February 6, 2025, RBC cut its price target from $256 to $245, though it maintained an outperform rating. The adjustment reflects short-term macroeconomic headwinds, including higher input costs and potential slowing orders in certain industrial segments.

These adjustments highlight the mixed sentiment surrounding IDEX, as some analysts see continued growth potential, while others remain cautious about near-term challenges.

Earning Report Summary

IDEX Corporation recently shared its latest earnings report, giving investors a clear look at how the company performed in the fourth quarter and over the full year. There were some strong points, but also a few areas where growth slowed.

Fourth Quarter Highlights

Sales for the quarter came in at $863 million, which was a 9% increase from the same period last year. That’s a solid jump, with organic sales growth of 3%, meaning most of the gains came from existing business rather than acquisitions.

Earnings per share (EPS) landed at $1.62, up 13% from the previous year. On an adjusted basis, EPS came in at $2.04, which was 11% higher than the prior year. Profitability remained strong, though cash flow dipped a bit. Operating cash flow for the quarter was $173 million, down 14%, while free cash flow came in at $157 million, about 12% lower than last year.

Full Year Performance

For the full year, IDEX brought in $3.3 billion in total sales, which was essentially flat compared to the prior year, with a small 2% organic decline. Full-year reported EPS was $6.64, down 15%, while adjusted EPS was $7.89, slipping 4% from 2023.

Cash flow remained healthy, with operating cash flow at $668 million, down 7% from last year. Free cash flow was $603 million, a 4% decline, but conversion rates stayed strong, meaning the company is still efficiently turning its earnings into cash.

Looking Ahead to 2025

Management provided guidance for 2025, expecting organic sales growth between 1% and 3% for the year. Earnings per share are projected to range between $6.56 and $6.96 on a GAAP basis, with adjusted EPS estimated between $8.10 and $8.45.

For the first quarter, however, the company is expecting a slight dip in organic sales, predicting a 3% to 4% decline. EPS for the quarter is expected to be between $1.18 and $1.24, with adjusted EPS ranging from $1.60 to $1.65.

Overall, IDEX remains on solid footing, with steady sales and earnings growth in some areas, though management is keeping expectations in check as they navigate some industry headwinds.

Financial Health and Stability

When looking at dividend stocks, financial stability is key. IDEX’s fundamentals indicate a well-run company with strong margins and manageable debt.

Profitability

• Profit margin: 15.45%
• Operating margin: 20.23%
• Return on equity: 13.76%

Balance Sheet Strength

• Cash on hand: $620.8 million
• Total debt: $2.09 billion
• Debt-to-equity ratio: 55.03%

With a current ratio of 2.53, IDEX has more than enough liquidity to cover short-term obligations. Debt is at a reasonable level for an industrial company, and the business consistently generates strong cash flow. Operating cash flow for the past year was $668.1 million, which provides plenty of financial flexibility.

Valuation and Stock Performance

At $186.23 per share, IDEX is trading well below its 52-week high of $246.36. That’s a drop of over 21%, which may make it more appealing for long-term investors.

Looking at valuation, the stock isn’t exactly cheap, but it’s not in bubble territory either.

• Price-to-earnings ratio (P/E): 28.26 trailing, 22.62 forward
• Price-to-book ratio: 3.75
• Enterprise value to EBITDA: 18.14

With a beta of 0.98, IDEX moves in line with the broader market, making it a relatively stable industrial stock. Given its strong fundamentals, the recent pullback could be an opportunity for investors who believe in its long-term potential.

Risks and Considerations

Every investment comes with some level of risk, and IDEX is no exception. A few potential concerns to keep in mind:

• Economic Sensitivity – As an industrial company, IDEX depends on capital spending from its customers. If industrial activity slows, revenue growth could be impacted.
• Interest Rates – Higher borrowing costs could affect future acquisitions or expansion plans.
• Acquisition Risk – The company has grown through acquisitions, and while this strategy has worked well, there’s always a risk that an acquisition doesn’t deliver the expected returns.

Final Thoughts

IDEX may not be the highest-yielding stock, but it offers a well-balanced combination of dividend growth, financial strength, and long-term stability. Investors who prioritize steady income with the potential for capital appreciation may find this an attractive option.

With 13 years of dividend increases, a sustainable payout ratio, and strong cash flow, IDEX is positioned to continue rewarding shareholders for years to come. While valuation is still on the higher side, the recent price decline may provide a better entry point for those looking to add a high-quality industrial stock to their portfolio.