Updated 3/26
While patients may never interact with their products directly, healthcare facilities around the world rely on STERIS every day. From sterilization systems to surgical equipment and infection prevention services, this is a business built around keeping medical environments safe, clean, and compliant.
Headquartered in Ireland but operating globally, STERIS has built a reputation for reliability and precision. It’s not a company chasing headlines—it’s quietly becoming an essential part of healthcare infrastructure. And for dividend-focused investors, that kind of consistency can be gold.
Recent Events
STERIS has had a solid run lately. Its most recent quarterly report showed revenue growth of 5.6% year over year, but what stood out even more was the bottom line—earnings were up more than 23%. That kind of spread shows strong operating leverage, and it confirms that the company knows how to convert sales into profits.
Behind the scenes, they continue acquiring smaller players and integrating them into their broader platform. The focus isn’t on splashy mega-mergers but on smart, incremental moves that deepen their market position.
What’s particularly reassuring for long-term investors is that STERIS has continued to raise its dividend. It’s not a dramatic yield, but it’s consistent and growing, and in today’s market, that stability matters.
Key Dividend Metrics
💰 Dividend Yield: 1.02%
📆 Dividend Growth Streak: 13 years
📤 Five-Year Dividend Growth Rate: Around 9% annually
🛡️ Payout Ratio: 35.05%
🔁 Distribution Frequency: Quarterly
📅 Next Payment Date: March 21, 2025
🔎 Ex-Dividend Date: February 20, 2025
Dividend Overview
STERIS offers a dividend that’s modest on the surface, but it’s the story behind the numbers that matters. A yield of just over 1% may not raise eyebrows at first glance, but the company has a long history of raising that payout—thirteen straight years and counting.
This is a business that pays its dividend out of real profits and actual cash flow. The current payout ratio sits at a healthy 35%, which leaves plenty of room for continued increases. They’re not sacrificing reinvestment in the business to keep shareholders happy—they’re managing both priorities well.
For income investors with a long-term view, this is the kind of dividend you can count on to quietly grow in the background year after year.
Dividend Growth and Safety
STERIS hasn’t just been consistent—it’s been aggressive with dividend increases. The five-year average growth rate is close to 9%, which is more than respectable for a company in a traditionally slow-and-steady sector like healthcare.
The dividend is backed by strong free cash flow, totaling over $1.1 billion in the past year. Actual cash going out the door for dividends was a fraction of that, leaving a wide margin of safety. Levered free cash flow stands at nearly $878 million, which gives them plenty of flexibility.
Debt is well-managed. The company has a total debt load of $2.3 billion against equity of about $6.4 billion, which puts its debt-to-equity ratio at 36%. Add to that a current ratio above 2, and you have a company that’s not only liquid but also in no rush to lever up.
Bottom line: this dividend is safe, and it’s growing. That’s the combination dividend investors should be looking for.
Chart Analysis
Current Price Behavior and Moving Averages
STERIS (STE) closed at 221.76 on March 25, 2025, just slightly below both its 50-day and 200-day simple moving averages. The 50-day SMA is currently curling upward, signaling some recovery momentum from earlier lows, while the 200-day SMA has recently flattened out after a decline. This suggests the stock is in a transition phase rather than clearly trending up or down.
The recent crossover, where the 50-day SMA approached and temporarily crossed above the 200-day line, hinted at a possible bullish move. However, price action has been indecisive since, with candles clustering tightly near both averages. This kind of behavior often shows a tug-of-war between short-term buyers and longer-term holders.
Volume and Participation
Volume has generally been on the lower side during the recent sideways move, which adds to the indecision. Notably, the strongest green volume bars occurred during upward thrusts in January and February, showing some accumulation during those spikes. But red volume spikes in March reveal that sellers are still very much present and willing to offload shares around the 230 level.
The last few sessions have seen lighter volume with a slight downward drift in price, suggesting the pullback may not yet be finding solid footing. Without stronger buying volume, it’s hard to see a clear path out of this consolidation just yet.
RSI and Momentum
The Relative Strength Index (RSI) is sitting in neutral territory, neither overbought nor oversold, which lines up with the overall sideways pattern. It’s bounced between the 40 and 60 levels for weeks, lacking the strength to break into more decisive zones. That aligns with what the price action and moving averages are already showing—lack of clear conviction.
There was a brief push into overbought territory back in late February, followed by a quick fade. That move failed to sustain itself, reinforcing the idea that the current setup is more range-bound than trending.
Candle Activity and Recent Behavior
Looking at the most recent five candles, the picture reflects hesitation. Three of them have long upper wicks, hinting that sellers are stepping in each time price tries to push higher. One candle in particular, from March 22, shows a clear rejection from the 230 level with a sharp intraday reversal. The last two candles are small-bodied with narrow ranges, showing a lack of momentum in either direction.
These patterns typically point to a market that’s trying to decide its next move. There’s no aggressive buying pressure, but selling pressure hasn’t completely overwhelmed either. The stock is hovering in a wait-and-see mode, likely in search of a catalyst.
Analyst Ratings
STERIS plc (STE) has been on the radar of analysts recently, drawing a series of updated ratings and revised price targets. 🧭 The current consensus leans toward an “Overweight” stance, suggesting analysts generally expect the stock to outperform its sector peers.
📈 The average 12-month price target stands at around $257.60, with projections ranging between a more conservative $230.00 and a bullish $265.00. That spread reflects a mix of cautious optimism and high confidence in the company’s long-term stability and growth potential.
🔎 Several notable updates have come through in the past few weeks:
📌 JMP Securities reaffirmed their “Market Outperform” rating with a $265.00 price target, reflecting their view that STERIS is executing well and has room to run based on strong fundamentals.
📌 Stephens & Co. also reiterated an “Overweight” rating, assigning a $250.00 target. Their view is anchored in STERIS’s ability to navigate economic uncertainty with steady margins and improving cash flow.
🚀 A more bullish turn came from Piper Sandler, who upgraded the stock from “Neutral” to “Overweight” and hiked their target from $230.00 to $265.00. This move was driven by improving visibility into the company’s backlog and demand in sterilization and surgical product lines.
⚖️ On the more neutral side, Morgan Stanley maintained an “Equalweight” stance with a lower price target of $215.00. Their caution is rooted in the belief that while the business is fundamentally solid, the valuation may be ahead of near-term earnings momentum.
📊 Overall, analysts appear to value the company’s consistent performance, durable business model, and exposure to stable healthcare demand. While there are differing views on just how much upside remains, the majority agree that STERIS is a well-positioned name in the medical technology space.
Earning Report Summary
STERIS just wrapped up its third quarter for fiscal 2025, and the numbers tell a pretty steady story. Revenue came in at around $1.4 billion, which is a 6% bump compared to the same time last year. Most of that growth came from solid volume and pricing improvements, especially in areas like consumables and services.
Net income landed at about $173.6 million, or $1.75 per diluted share. On an adjusted basis, the company pulled in $2.32 per share, which is a nice step up from $2.09 a year ago. It’s clear management is keeping a sharp eye on costs while still growing the top line.
Healthcare Segment
This is STERIS’s largest business, and it had a strong quarter. Revenue hit $976 million, up 7%. Consumables were up 9%, and service revenue climbed 13%. Capital equipment sales were the only soft spot, dipping 5%, but that didn’t stop operating income from growing. It reached $246.9 million, which is a nice gain from the $223.9 million recorded last year. The improvement came from better volume and pricing, as well as efficiency gains across operations.
Applied Sterilization Technologies (AST)
This segment showed some solid momentum too. Revenue grew 10%, reaching $258.1 million, mostly on the back of strong service demand. Operating income also climbed to $115.8 million, up from $105.2 million the year before. AST is benefiting from the steady need for contract sterilization services, which tend to be pretty resilient.
Life Sciences
This area saw a bit of a dip. Revenue fell 7% to $136.4 million. Some of that was expected, especially after STERIS sold off its CECS business. Capital equipment sales also came in lighter. Still, operating income edged slightly higher, hitting $58.1 million. Better pricing and product mix helped cushion the impact from the lower sales.
Cash Flow and Guidance
On the cash side, STERIS is in a strong spot. They generated $887.3 million in operating cash flow over the first nine months of the fiscal year, which is up nicely from $718.5 million last year. Free cash flow rose too, coming in at $588.1 million. A big part of that came from tighter working capital management.
Looking ahead, the company slightly trimmed its full-year revenue outlook due to currency impacts and some softness in capital equipment. They’re now guiding to about 6% revenue growth and expect adjusted EPS to fall between $9.05 and $9.15. Capital spending is expected to hit around $360 million, with free cash flow landing close to $700 million. All in all, it was a solid, steady quarter with a few moving pieces but no big surprises.
Financial Health and Stability
STERIS isn’t chasing high-growth opportunities at the expense of its foundation. The financial picture here is one of stability and consistency. Return on equity sits just below 10%, and return on assets is about 5.6%. These numbers reflect the company’s disciplined approach—no unnecessary risks, just consistent performance.
Cash generation is a strong point. The business brought in over $1.1 billion in operating cash flow last year, more than enough to cover capital investments, acquisitions, and dividends. They ended the last quarter with $155 million in cash, which while not huge, is balanced against a manageable debt load.
Margins are healthy too. With an operating margin over 18% and strong EBITDA figures, STERIS is showing it can maintain profitability even as it grows.
Valuation and Stock Performance
At its current price around $223, the stock trades at a trailing price-to-earnings ratio of just under 36 and a forward P/E of about 24. That’s on the higher side, but STERIS has rarely been a cheap stock. Investors have historically paid a premium for the quality and consistency it brings.
The PEG ratio, sitting above 5, might suggest it’s expensive relative to future growth, but that can be misleading. With earnings growth just recently accelerating, the ratio doesn’t reflect the improved efficiency and profitability that’s coming through.
Over the past 12 months, shares have dipped slightly—down less than 1%—while the S&P 500 has moved higher. But zoom out, and the long-term performance tells a different story. STERIS has compounded steadily over the years, and it’s done so without needing to chase trends or take on excessive risk.
Currently, the stock is trading in the middle of its 52-week range, between $197 and $248, and it’s hovering right around its 50-day and 200-day moving averages. That suggests a bit of indecision in the market, but for long-term investors, it may simply reflect a pause before the next leg higher.
Risks and Considerations
Every company has risks, and STERIS is no exception. The biggest come from the regulatory environment. As a provider of medical and sterilization equipment, STERIS has to navigate complex and sometimes changing rules in multiple countries.
There’s also currency risk, given its global footprint. Movements in exchange rates can affect reported earnings and complicate financial forecasting.
From a dividend perspective, the biggest issue is the relatively low starting yield. If you’re looking for immediate income, this may not be the first name on your list. But if you’re focused on income growth over time, it becomes a lot more attractive.
Valuation is also something to watch. At current levels, the stock doesn’t leave much room for disappointment. A slip in earnings or slower-than-expected growth could result in pressure on the share price, even if the fundamentals remain strong.
Final Thoughts
STERIS isn’t the kind of company that makes headlines, but for dividend investors, that’s not a bad thing. What it offers is consistency, safety, and a long runway for continued growth. It operates in a space where demand isn’t going away, and it’s shown it can deliver steady results through different market conditions.
The dividend isn’t huge, but it’s growing steadily. The balance sheet is in good shape. And the business continues to throw off free cash flow quarter after quarter.
For investors focused on building a long-term, income-generating portfolio, STERIS is the kind of quiet achiever that deserves a close look.