Updated 3/13/25
Pentair plc (PNR) is a company that specializes in water treatment and filtration solutions, serving residential, commercial, and industrial markets. With growing global concerns over water quality and infrastructure, Pentair is positioned to benefit from long-term industry trends.
For dividend investors, Pentair isn’t the highest-yielding stock on the market, but it offers consistency, financial strength, and a history of responsible cash management. Whether you’re looking for steady income or long-term dividend growth, there’s plenty to consider with this stock.
Key Dividend Metrics
💰 Forward Dividend Rate: $1.00 per share
📈 Forward Dividend Yield: 1.16%
🔄 Trailing Annual Dividend Yield: 1.07%
📊 5-Year Average Dividend Yield: 1.39%
💵 Payout Ratio: 24.6%
📅 Ex-Dividend Date: April 17, 2025
📆 Next Dividend Payment Date: May 2, 2025
Dividend Overview
Pentair’s dividend yield of 1.16% might not turn heads at first, especially when compared to income-focused stocks in sectors like utilities or real estate. However, what stands out is how sustainable this dividend is. The payout ratio sits at just 24.6%, meaning the company is using a relatively small portion of its earnings to fund dividend payments. That leaves plenty of room for increases in the future while ensuring financial flexibility.
Looking at historical trends, Pentair’s five-year average dividend yield of 1.39% suggests the stock’s recent price appreciation has pushed the yield slightly below its norm. For long-term investors, this stability can be just as important as a high yield, especially when paired with a company that has a track record of increasing payouts.
Dividend Growth and Safety
Pentair has done a solid job of steadily increasing its dividend over time. Its financial discipline and consistent cash flow generation make it a reliable choice for income investors.
One of the biggest positives is its conservative payout ratio. At 24.6%, Pentair is keeping a large chunk of its earnings for reinvestment, debt reduction, or share repurchases. This approach provides a cushion in case of economic downturns while allowing room for future dividend hikes.
Another factor to consider is the company’s cash flow. With levered free cash flow of over $600 million, Pentair’s dividend payments are well covered. Even if earnings were to take a hit temporarily, the company has the financial strength to continue rewarding shareholders.
The only slight concern is the recent 20% drop in quarterly earnings growth. While this doesn’t pose an immediate risk to the dividend, it’s worth monitoring to see if it becomes a longer-term trend.
Chart Analysis
Price Action and Moving Averages
Pentair’s stock has been in a downtrend recently, with the price now trading below both the 50-day and 200-day moving averages. The 50-day moving average, which had been acting as support for much of last year, has now turned downward, signaling a shift in momentum. The stock is also approaching the 200-day moving average from above, and after breaking below it, there hasn’t been much of a bounce, which suggests weak buying interest.
Earlier in the chart, there was a clear uptrend, with price action steadily moving higher along with the moving averages. However, the recent breakdown below the key support level around $90 has shifted the outlook, with lower highs and lower lows forming. The stock is now struggling to hold above $85, a level that could act as near-term support.
Volume and Market Participation
Trading volume has been elevated during the most recent price drop, indicating strong selling pressure. When stocks decline on high volume, it often suggests that institutional investors are reducing their positions rather than just retail-driven volatility.
Earlier in the chart, volume spikes coincided with price rallies, showing strong interest from buyers. However, in recent weeks, the volume bars are mostly associated with price declines, reinforcing the idea that sellers are in control.
Relative Strength Index (RSI)
The RSI is currently trending in the lower range, which indicates that the stock is in an oversold condition. This doesn’t necessarily mean an immediate bounce is coming, but it does suggest that selling momentum has been strong.
Earlier, when the stock was trading near its highs, the RSI was hovering around overbought levels, indicating that the stock was likely due for a pullback. Now that it’s approaching the opposite extreme, it will be important to watch if the RSI starts to turn upward, as that could hint at a potential relief rally.
Recent Candlestick Patterns
Looking at the last five candles, the price action suggests continued weakness. There have been multiple red candles with long upper wicks, which often indicates that sellers are stepping in whenever the stock attempts to push higher. The most recent candle closed near its low of the day, showing that there wasn’t much buying pressure to counteract the decline.
If this pattern continues, the stock could see further downside, but if buyers start to step in and push prices higher on strong volume, it could signal a shift in momentum. For now, the trend remains to the downside, with no clear signs of a reversal just yet.
Analyst Ratings
📈 Upgrades and Positive Revisions
Several analysts have expressed confidence in Pentair’s prospects. On January 24, 2025, Stifel Nicolaus adjusted their price target for Pentair to $125 from $126, maintaining a “Buy” rating. Similarly, Citigroup, on January 13, 2025, revised their price target to $119 from $126, also upholding a “Buy” recommendation.
These upgrades are largely driven by optimism surrounding Pentair’s steady revenue streams from its water filtration and pool equipment segments. Analysts who are bullish on the stock highlight strong free cash flow, ongoing demand for water treatment solutions, and the company’s ability to increase margins despite macroeconomic headwinds.
📉 Downgrades and Neutral Stances
Not all analysts share the same enthusiasm. On January 6, 2025, KeyBanc downgraded Pentair to “Sector Weight” from “Overweight.” The downgrade reflects concerns about the potential impact of higher interest rates on the company’s pool-related business, as elevated borrowing costs could slow down new pool construction and related consumer spending.
Some analysts also pointed to recent earnings declines and a cautious outlook for industrial spending, which could weigh on near-term growth. Those with a more neutral stance acknowledge Pentair’s strengths but remain hesitant due to macroeconomic uncertainties.
🎯 Consensus Price Target
As of early February 2025, the consensus among 15 analysts is a 12-month average price target of $112, with estimates ranging from $86 on the low end to $125 on the high end. This suggests a potential upside of around 24 percent from the current stock price of $89.82.
Overall, the mixed sentiment reflects both the company’s strong fundamentals and the broader economic factors that could influence its performance in the coming months.
Earning Report Summary
Pentair’s latest earnings report shows a company that’s holding steady despite some economic headwinds. While revenue dipped slightly, the results were still better than many expected, showing that demand for the company’s water solutions remains strong.
Revenue and Earnings Performance
For the fourth quarter of 2024, Pentair reported revenue of $972.9 million, a small decline of 1.2% from the same time last year. While a drop in revenue isn’t ideal, it was still slightly above what analysts had predicted, proving that the company’s business remains resilient.
Earnings per share came in at $1.08, beating expectations of $1.02. That might not seem like a huge difference, but it highlights Pentair’s ability to manage costs and keep profitability strong even when revenue softens a bit. The company has done a good job of keeping its margins in check, which is a big reason why earnings came in ahead of forecasts.
How Each Segment Performed
Pentair’s business is spread across a few key areas, each playing a role in the overall results.
- The Consumer Solutions segment, which includes pool equipment and home water treatment systems, continued to see steady demand. With homeowners still prioritizing maintenance and upgrades, this division has remained a solid performer.
- The Industrial & Flow Technologies segment, which serves businesses and industries that need water management solutions, held up well. Companies are still investing in water efficiency, keeping demand for these products stable.
- The Water Quality Systems segment, focused on filtration and commercial water treatment, showed consistent sales, reinforcing the idea that clean and safe water remains a priority for businesses.
Key Takeaways from the Report
Pentair isn’t just coasting—it’s investing in innovation and sustainability to stay ahead of the curve. The company continues to roll out energy-efficient and smart water management solutions, which fit well with long-term trends toward sustainability.
Pentair’s financial position is also in good shape. The company has kept its debt under control while still returning value to shareholders through dividends and share buybacks. With strong cash flow and smart spending, Pentair has the flexibility to keep investing in growth without putting itself in a risky position.
What’s Next?
Looking ahead, Pentair expects earnings growth to continue, fueled by demand in its core markets. While economic uncertainty could create some bumps along the way, the company’s focus on innovation and efficiency should help it stay on track. All in all, this latest report shows that Pentair is managing well and keeping itself in a good position for the future.
Financial Health and Stability
A company’s ability to pay dividends depends on its overall financial health. Pentair maintains a strong balance sheet with manageable debt levels and steady cash flow, both of which are crucial for long-term dividend sustainability.
The company currently has $1.77 billion in total debt, with a debt-to-equity ratio of 49.6%. This is within a reasonable range for an industrial company but is something to keep an eye on. Fortunately, Pentair generates plenty of cash, with operating cash flow sitting at $766 million.
Profitability metrics also paint a positive picture. The company’s return on equity (ROE) is 18.45%, while return on assets (ROA) comes in at 8.63%. Combined with an operating margin of 21.05%, these numbers suggest Pentair is running an efficient business and using its capital wisely.
Valuation and Stock Performance
Valuation is another important factor when considering a dividend stock. Pentair’s trailing price-to-earnings (P/E) ratio stands at 23.01, while its forward P/E is 18.12. This means the stock isn’t cheap, but it’s also not trading at excessive levels. Investors seem to be pricing in future growth potential, which makes sense given the company’s strong fundamentals.
Looking at stock performance, Pentair is currently trading at $85.54, which is well below its 52-week high of $110.71 but still comfortably above its 52-week low of $72.63. The stock is also trading below its 200-day moving average of $92.90, suggesting that recent price action has been somewhat weaker.
For long-term dividend investors, a stock’s valuation is important when deciding on an entry point. With shares trading at a discount from recent highs, it could be worth watching for a better yield opportunity if the price pulls back further.
Risks and Considerations
Every investment carries risk, and Pentair is no exception. While it has a solid dividend history, there are a few factors that investors should keep in mind.
One potential challenge is the company’s exposure to economic cycles. As an industrial company, Pentair’s revenue is tied to construction, infrastructure spending, and general economic conditions. A slowdown in these areas could lead to lower demand for its products.
Another area of concern is the recent decline in earnings growth. A 20% drop in quarterly earnings is notable, and while it may not be a long-term issue, it’s something to keep track of. If this trend continues, it could impact future dividend increases or stock performance.
The current interest rate environment is another consideration. Higher interest rates can increase borrowing costs, which might make it more expensive for Pentair to finance growth or refinance existing debt. While its balance sheet is strong, prolonged high rates could add some pressure over time.
Finally, competition in the water treatment and filtration industry is fierce. Pentair operates in a space where innovation and cost efficiency matter. If competitors gain market share or disrupt the industry with new technology, it could impact Pentair’s margins and growth potential.
Final Thoughts
Pentair isn’t the type of stock that income investors flock to for high yields, but it does offer something just as valuable—consistency. With a history of dividend growth, a conservative payout ratio, and strong cash flow generation, it’s a stock that dividend investors can rely on over the long term.
The stock’s recent pullback from its highs could present an opportunity for those looking to start or add to a position. While the recent dip in earnings is worth watching, the company’s fundamentals remain strong, and its exposure to long-term water infrastructure trends provides a solid backdrop for future growth.
For investors seeking stability and a growing income stream, Pentair is a name worth keeping on the radar.
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