Updated 3/13/25
Patrick Industries (PATK) is a company that flies under the radar for many dividend investors, but it has quietly built a strong reputation in the world of RVs, marine products, and manufactured housing. As a key supplier in these industries, its performance is tied to economic cycles, making it a stock that can move with consumer demand.
While PATK isn’t a traditional high-yield dividend play, it does offer steady dividend growth and a payout that appears well-supported by cash flow. For investors looking to balance income with potential stock price appreciation, this one is worth a deeper dive.
Key Dividend Metrics
📌 Dividend Yield: 1.88% (Forward)
📌 Annual Dividend Rate: $1.60
📌 Payout Ratio: 36.5% – Well covered and sustainable
📌 5-Year Average Dividend Yield: 1.83% – Slightly below current levels
📌 Dividend Growth Rate (5-Year CAGR): Steady increases over time
📌 Ex-Dividend Date: February 18, 2025
📌 Recent Dividend Payment: March 3, 2025
The numbers paint a picture of a stock that prioritizes steady dividend payments without overcommitting. The payout ratio is particularly reassuring, showing that Patrick Industries isn’t stretching itself too thin to return capital to shareholders.
Dividend Overview
At first glance, PATK’s dividend yield of 1.88% may not jump out as particularly high. However, when combined with its track record of increasing payments and a strong cash flow position, the company presents an attractive case for long-term income investors.
One of the best aspects of PATK’s dividend is that it’s sustainable. The company’s current payout ratio of 36.5% means it retains plenty of earnings to reinvest in growth while still rewarding shareholders. Some high-yield stocks may offer a larger payout, but they often come with higher risk if earnings slip. Patrick Industries is keeping things balanced.
The dividend is also backed by strong free cash flow, which is key in a cyclical business. With $326.84 million in operating cash flow and $170.28 million in levered free cash flow, the company has room to navigate economic swings while maintaining its commitment to dividend payments.
Dividend Growth and Safety
One of the standout features of PATK’s dividend strategy is its steady growth. The company has consistently raised its dividend over time, and the increase from $1.50 to $1.60 in the forward annual rate is a sign that management remains confident in its financial position.
That confidence is backed up by strong cash flow, but there’s also some risk here. The company saw a 52.8% drop in quarterly earnings growth year over year, which is a reminder that earnings in this space can be unpredictable. Despite this, the company’s current ratio of 2.33 suggests it has enough liquidity to weather economic downturns without immediately cutting back on dividends.
Another encouraging sign is that the company’s five-year average dividend yield of 1.83% is close to its current yield. This consistency suggests that management doesn’t overpromise and underdeliver when it comes to dividends.
Chart Analysis
The stock chart for Patrick Industries (PATK) presents an interesting technical picture, reflecting both recent weakness and longer-term strength. The price has been moving in a well-defined range over the past year, with a series of peaks and troughs suggesting a cyclical nature to its movements. Several key indicators stand out, providing insight into where the stock might be headed next.
Moving Averages and Trend Direction
The 50-day moving average has been trending slightly downward, which suggests some recent weakness in the stock. It had been acting as support in previous months, but now the price appears to be dipping below it, signaling a potential shift in momentum.
The 200-day moving average, on the other hand, remains in an upward trend. This is a longer-term bullish signal, indicating that the stock is still in a broader uptrend despite the recent pullback. What’s particularly important here is that the stock price is currently hovering near this key level. If it holds, it could serve as a strong support zone, but if it breaks below, there may be further downside pressure.
Price Action and Volume
The stock has been making lower highs in recent months, which could be an early warning sign that bullish momentum is slowing. The recent decline suggests some investors are taking profits, but it hasn’t been a sharp sell-off, which means there’s still a chance for the stock to stabilize.
Volume tells a story of its own. There have been a few notable spikes, particularly during sell-offs, which could indicate institutional selling. However, more recently, volume has remained moderate, suggesting no major panic selling at the moment. If volume starts increasing significantly on down days, it might be a signal that more selling pressure is building.
Relative Strength Index (RSI)
The RSI indicator is trending lower, currently sitting in the lower part of its range. It hasn’t quite reached oversold territory yet, but it’s getting closer. If it dips further, it could indicate that the stock is nearing a point where buyers may step back in.
A bounce from these levels could suggest the selling pressure is easing, while a continued drop would reinforce the bearish momentum. Watching how RSI behaves in the coming sessions could provide a clue as to whether the stock is poised for a reversal or more downside.
Support and Resistance Levels
The stock appears to have support near the 200-day moving average, which has historically acted as a key level. If this holds, it could provide a base for the stock to rebound.
On the upside, the 50-day moving average now seems to be acting as resistance. The stock attempted to move back above this level but struggled, which means that any attempt to regain upward momentum will likely face resistance in the $90-$92 range.
If the stock does manage to break above its 50-day moving average, it could signal a return to an uptrend, but for now, it appears that buyers need to step in at these support levels to prevent further downside.
Analyst Ratings
📈 Upgrades and Positive Sentiment
Patrick Industries (PATK) has received some favorable analyst attention recently, with multiple firms increasing their price targets and maintaining bullish outlooks.
🟢 Truist Financial raised its price target from $115 to $120, reaffirming a buy rating. The firm cited strong earnings performance and operational efficiencies as key reasons for its optimism.
🟢 Benchmark initiated coverage with a buy rating, signaling confidence in PATK’s ability to navigate market conditions successfully.
🟢 Oppenheimer took an even more optimistic stance, assigning an outperform rating with a price target of $160. Analysts at the firm pointed to growth in the company’s core markets, particularly in RV components and marine products, as a catalyst for future upside.
These upgrades highlight analysts’ belief that PATK’s business fundamentals remain strong, with revenue growth and acquisitions playing a role in their positive outlook.
📉 Downgrades and Cautionary Notes
While some analysts see upside, others have taken a more cautious approach.
🔴 StockNews.com downgraded PATK from hold to sell, citing concerns over potential market headwinds. Analysts pointed to factors like rising input costs and a slowdown in discretionary consumer spending, which could affect demand for RV and marine-related products.
🔴 Some firms have expressed concern over valuation, arguing that after a strong run-up in price, the stock may be fully valued at current levels. This perspective suggests that while the company remains fundamentally solid, future gains may be harder to come by.
📊 Consensus and Price Target
The overall sentiment on Patrick Industries remains moderately bullish, with a consensus rating of moderate buy among analysts. The average price target currently stands at $97.96, indicating potential upside from current levels. However, opinions remain split depending on how analysts weigh the company’s growth prospects against broader economic uncertainties.
Earning Report Summary
Patrick Industries just dropped its latest earnings report, and there’s a lot to unpack. The numbers show the company is still growing, but like many businesses right now, it’s facing some cost pressures that are putting a squeeze on profits.
Revenue was up from the previous quarter, which is always a good sign. The company’s core markets—RVs, marine, and manufactured housing—helped drive that growth. That said, not every segment performed equally well. While demand for marine products remained solid, the RV side of things saw a bit of a slowdown as consumer spending in that category pulled back.
On the profitability side, things were a little tougher. Net income came in lower than last year, and higher costs were the main culprit. Inflation has been pushing up material prices and labor expenses, which made it harder for Patrick Industries to maintain the same level of profitability. They’ve been working on cost-saving strategies to offset this, but it’s clear that rising costs have been a challenge.
Margins also took a hit compared to last year, reflecting a trend that many companies are dealing with right now. Even with that, the company is still generating strong free cash flow, which is key for keeping operations running smoothly and continuing to pay dividends.
One of the bright spots in the report was the marine division, which performed well and helped counterbalance some of the RV weakness. Boats and recreational watercraft remain popular, and Patrick Industries has been benefiting from that steady demand.
Management addressed concerns about inventory and supply chain efficiency, making it clear that they’re keeping a close eye on production levels to avoid building up too much stock. That’s a smart move, especially if economic conditions soften further in the months ahead.
Looking forward, the company is taking a balanced approach. Leadership acknowledged that there are still uncertainties ahead, but they remain confident in their ability to adjust and stay profitable. They also reassured investors that dividends remain a priority, along with strategic investments to keep growing the business.
All in all, this was a mixed report—good revenue growth, some pressure on profits, but no major red flags. Investors will likely be watching how well Patrick Industries can manage costs in the coming months and whether earnings start to stabilize as inflationary pressures ease.
Financial Health and Stability
Patrick Industries is carrying a decent amount of debt, with a debt-to-equity ratio of 134.94%. That’s on the higher side, which means the company relies more on borrowing to fund operations and growth. While this isn’t necessarily a red flag, it does mean that if interest rates remain elevated, debt servicing costs could eat into profits.
On the positive side, the company remains profitable and is generating strong cash flow. With return on equity at 12.73% and return on assets at 5.78%, PATK is putting its capital to work efficiently, even if these numbers aren’t off-the-charts impressive.
One thing to monitor is the company’s earnings trend. While revenue has grown 8.3% year over year, net income has taken a hit. This could signal some margin pressure or rising costs that may impact the company’s ability to increase dividends as aggressively in the future.
Valuation and Stock Performance
At its current price of $85.34, Patrick Industries is trading at a trailing P/E ratio of 20.76 and a forward P/E of 16.10. This suggests that the market expects earnings to improve in the coming quarters. Compared to historical valuations, this is fairly reasonable for a cyclical company.
One interesting aspect of PATK’s stock performance is its volatility. The stock has traded between $67.72 and $98.90 over the past year, meaning it can move significantly based on market sentiment. Right now, it’s sitting near the middle of that range.
The 50-day moving average is $90.62, slightly above the current price, while the 200-day moving average sits at $85.82. This suggests the stock has pulled back recently but remains in line with longer-term trends.
Another factor to watch is short interest. Currently, 11.67% of the float is sold short, meaning a significant number of investors are betting the stock will decline. If sentiment shifts, this could lead to either downward pressure or, conversely, a short squeeze if buyers step in.
Risks and Considerations
1️⃣ Cyclical Industry Exposure – Patrick Industries is heavily tied to the RV, marine, and manufactured housing markets, all of which depend on consumer spending and interest rates. If demand slows, earnings could take a hit.
2️⃣ Debt Load – The 134.94% debt-to-equity ratio means the company is leveraged. While manageable now, high debt levels can become an issue if borrowing costs rise or cash flow declines.
3️⃣ Earnings Volatility – The 52.8% decline in quarterly earnings growth is a concern. While revenue is up, net income is under pressure, which could limit future dividend increases.
4️⃣ Stock Price Swings – With a beta of 1.74, PATK is more volatile than the broader market. Investors should be prepared for price fluctuations, particularly during economic downturns.
5️⃣ Short Interest – The 11.67% short interest indicates that some investors are betting against the stock. While this doesn’t necessarily mean trouble, it’s something to watch.
Final Thoughts
Patrick Industries offers a solid mix of dividend growth and stock appreciation potential. While the 1.88% dividend yield isn’t eye-catching, it’s backed by a sustainable payout ratio and strong cash flow, making it an appealing option for investors who prioritize both income and capital growth.
The biggest risks here are tied to economic cycles and industry demand. As a supplier to RV and marine manufacturers, PATK’s earnings can fluctuate significantly. That said, the company has demonstrated an ability to manage these cycles well.
For investors who can handle some volatility and believe in the long-term demand for its products, Patrick Industries could be an interesting addition to a portfolio. However, those seeking a stable, defensive dividend stock may want to look elsewhere.
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