Updated 3/13/25
Parker-Hannifin Corporation has been a key player in the motion and control technology industry for over a century, providing essential components and systems for industries like aerospace, industrial manufacturing, and automation. With a strong reputation for innovation and efficiency, the company has consistently delivered value to shareholders.
At its current stock price of $613.14, Parker-Hannifin presents an interesting case for dividend investors. It’s not necessarily a high-yield play, but its track record of consistent payouts and financial stability makes it a strong option for those looking for dividend growth. Let’s take a closer look at how it stacks up.
Key Dividend Metrics
📌 Dividend Yield: 1.07%
📌 Annual Dividend Per Share: $6.52
📌 5-Year Average Dividend Yield: 1.42%
📌 Payout Ratio: 26.31%
📌 Dividend Growth Rate (5-Year): [Insert Growth Rate]
📌 Ex-Dividend Date: February 7, 2025
📌 Dividend Payment Date: March 7, 2025
Dividend Overview
Parker-Hannifin’s dividend yield of 1.07% might not turn heads at first glance, but it’s important to consider the bigger picture. The company’s dividend is designed for sustainability and long-term growth rather than offering a high immediate yield.
One of the strongest indicators of a healthy dividend is the payout ratio, which stands at just 26.31%. That means the company is using only a small portion of its earnings to pay dividends, leaving room for reinvestment in growth initiatives and future dividend increases.
For investors looking for reliable income with the potential for long-term appreciation, Parker-Hannifin’s approach to dividends fits well within a balanced portfolio.
Dividend Growth and Safety
Dividend growth is where Parker-Hannifin shines. Over the years, the company has demonstrated a steady commitment to increasing its payouts. This growth is backed by strong cash flow and earnings expansion, making it one of the more dependable dividend stocks in the industrial sector.
The company generates $3.21 billion in free cash flow, which comfortably covers its dividend obligations. Earnings per share have also shown strong momentum, increasing by 39.1% year-over-year. This kind of growth provides confidence that Parker-Hannifin can continue raising dividends without straining its financials.
Profitability is another strong suit. With an operating margin of 20.61% and a return on equity of 25.85%, Parker-Hannifin is efficiently using its resources to generate consistent profits. This efficiency adds another layer of security to its dividend payments.
Chart Analysis
The stock chart for Parker-Hannifin (PH) presents a mix of bullish and bearish signals, showing a shift in momentum over the past few months. There are clear trends forming with moving averages, volume, and relative strength, each giving insights into where the stock may be headed.
Moving Averages
The 50-day moving average has been trending above the 200-day moving average for a significant period, a sign of sustained bullish momentum. However, in recent weeks, the stock has dipped below the 50-day moving average and is approaching the 200-day moving average, which could act as a critical support level.
If the stock holds at the 200-day moving average and rebounds, it may signal a continuation of the long-term uptrend. On the other hand, if it breaks below, it could indicate a shift toward a more prolonged bearish phase. The downward slope of the 50-day moving average suggests that short-term momentum has weakened, reinforcing the need for caution.
Volume Trends
Volume has been fluctuating, with notable spikes in certain periods, indicating heightened buying and selling activity. There were clear surges in volume in mid-summer and again in the fall, often followed by short-term pullbacks.
More recently, trading volume has increased on red (selling) days, showing some profit-taking or potential distribution. This pattern suggests that investors may be repositioning, leading to a more volatile price action. If volume increases again near the 200-day moving average, it will be important to see whether buyers step in to defend that level or if selling pressure continues.
Relative Strength Index (RSI)
The RSI has been in a steady decline, moving closer to oversold territory. It reached overbought levels a few months ago when the stock was at its highs but has since dropped, reflecting weakening momentum.
A reading near or below 30 typically suggests a stock may be oversold, which could attract buying interest. However, if RSI remains weak and does not rebound soon, it could be a sign that the stock is entering a more extended period of underperformance.
Price Action and Trend Shifts
The stock’s price action over the past year has seen a strong rally, followed by a series of pullbacks. The recent decline from its highs near 700 suggests that sellers are now in control in the short term. However, support at the 200-day moving average will be a critical level to watch.
A bounce from this level could mean that long-term investors are stepping in to defend the trend, while a breakdown could suggest further downside risk. The lower highs and lower lows seen recently indicate that the stock is in a short-term correction phase.
The coming weeks will be crucial in determining whether the stock stabilizes and resumes its uptrend or if the selling pressure continues.
Analyst Ratings
Parker-Hannifin Corporation (PH) has recently received a mix of upgrades and downgrades from analysts, reflecting different views on the company’s outlook. The current consensus price target stands at $748.08, suggesting potential upside from its recent levels.
🔼 Recent Upgrades
📈 Wolfe Research upgraded Parker-Hannifin from “Peer Perform” to “Outperform” on December 12, 2024. The upgrade was based on strong financial performance and the company’s competitive positioning in its industry.
📊 Evercore ISI Group raised its price target to $824 from $777 on February 19, 2025, while maintaining an “Outperform” rating. The firm cited Parker-Hannifin’s operational efficiency and steady revenue growth as key drivers for the target increase.
✅ Citigroup initiated coverage on the stock with a “Buy” rating on February 7, 2025, setting a price target of $795. Analysts pointed to the company’s market leadership, diversified revenue streams, and resilience as reasons for their positive stance.
🔽 Recent Downgrades
⚠️ Stifel downgraded Parker-Hannifin from “Buy” to “Hold” on November 18, 2024, lowering its price target to $691. Concerns over slower-than-expected revenue growth and broader market uncertainty led to the change in rating.
📉 Barclays adjusted its price target downward from $791 to $750 on March 10, 2025, while keeping an “Overweight” rating. The revision reflected a reassessment of earnings potential in the short term, despite confidence in the company’s long-term trajectory.
💡 With analysts divided on the stock, the focus remains on Parker-Hannifin’s ability to navigate economic shifts while maintaining its growth strategy.
Earnings Report Summary
Parker-Hannifin just released its latest earnings report, and the numbers tell a story of steady growth and strong financial performance. The company brought in $4.7 billion in sales for the second quarter of fiscal year 2025, showing a slight but steady 1% increase from the same period last year. While revenue growth wasn’t explosive, profitability was the real highlight.
Net income came in at $949 million, which is a massive 39% jump compared to the previous year. Adjusted net income was also solid at $853 million, reflecting a 6% rise. Earnings per share saw an equally impressive boost, climbing 39% to $7.25. On an adjusted basis, EPS stood at $6.53, marking a 6% increase.
Margins also improved, with the segment operating margin rising to 22.1%, up 100 basis points. When adjusted, that number climbed even higher to 25.6%, reflecting an increase of 110 basis points. This suggests Parker-Hannifin is doing a great job at managing costs and improving efficiency, which is key to maintaining strong earnings even when revenue growth is modest.
One of the biggest takeaways from the report was the company’s cash flow. Year-to-date operating cash flow surged 24%, reaching $1.7 billion. That accounts for 17.4% of total sales, which is a great sign that Parker-Hannifin is generating strong cash reserves to support future investments and shareholder returns.
Overall, the latest earnings report reinforces the company’s ability to deliver steady financial performance, even in a challenging market. The combination of improved profitability, growing cash flow, and efficient operations suggests Parker-Hannifin is in a strong position as it heads into the rest of the fiscal year.
Financial Health and Stability
A reliable dividend requires a strong financial foundation, and Parker-Hannifin has a solid balance sheet, though there are a few areas worth watching.
- Debt Management: The company has $9.04 billion in total debt, with a debt-to-equity ratio of 68.88%. While this isn’t alarming, it does mean that a portion of earnings will be allocated to servicing debt rather than increasing dividends.
- Liquidity Position: The company has a current ratio of 1.06, meaning it has just enough short-term assets to cover its immediate liabilities. While this suggests financial stability, it also indicates that excess cash reserves are not abundant.
- Profitability Metrics: Gross profit stands at $7.22 billion, reinforcing the company’s ability to generate consistent revenue and maintain healthy margins.
Overall, Parker-Hannifin’s financials support its dividend policy, but investors should keep an eye on debt levels as the company continues to expand.
Valuation and Stock Performance
Valuation plays a crucial role in determining whether a stock is an attractive buy for dividend investors.
Parker-Hannifin currently trades at a trailing P/E ratio of 25.33 and a forward P/E of 20.79. While these numbers suggest the stock isn’t cheap, they also reflect investor confidence in the company’s earnings potential.
Recent stock movements provide additional context:
- 52-week high: $718.44
- 52-week low: $492.71
- 50-day moving average: $662.27
- 200-day moving average: $613.71
Right now, the stock is trading below its 50-day moving average but close to its 200-day moving average. This suggests the stock is in a period of consolidation, which could present opportunities for investors looking for a more attractive entry point.
One way to assess valuation is by comparing the current dividend yield to its historical average. Since today’s yield is lower than the five-year average of 1.42%, it suggests that the stock price has risen faster than dividend increases. While this is a positive sign of company growth, it does mean that the stock is not as attractively priced as it has been in the past.
Risks and Considerations
No investment is without risks, and Parker-Hannifin is no exception. Here are a few potential concerns:
- Interest Rate Sensitivity: As interest rates fluctuate, companies with significant debt loads may face increased borrowing costs. Parker-Hannifin’s debt level, while manageable, is something investors should monitor.
- Revenue Growth Challenges: The company reported a 1.6% decline in year-over-year revenue. While not a major red flag, it does indicate that top-line growth could face some challenges in the near term.
- Market Volatility: With a beta of 1.50, Parker-Hannifin’s stock tends to be more volatile than the overall market. While this isn’t necessarily a negative for long-term investors, those looking for stability should be aware of potential price swings.
Despite these risks, the company’s financial strength and disciplined dividend strategy provide a solid foundation for investors seeking reliable income.
Final Thoughts
Parker-Hannifin is an appealing choice for dividend investors who value consistency and long-term growth over a high immediate yield. With a low payout ratio, strong free cash flow, and a history of dividend increases, the company offers a compelling blend of stability and future potential.
From a valuation perspective, the stock isn’t at bargain levels, but it’s also not excessively overvalued. The lower-than-average dividend yield suggests that the stock has appreciated in price, which could mean waiting for a better entry point might be a consideration for some investors.
For those looking for a dependable dividend payer with strong financials and room for future increases, Parker-Hannifin remains a strong option. Keeping an eye on debt levels, revenue trends, and broader market conditions will help investors make informed decisions about this dividend stock’s long-term role in their portfolio.
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