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Graco: A High-Quality Dividend Growth Stock

Published Wed, 11 Sep 2019 14:32:57 -0400 on Seeking Alpha

Investment thesis
Graco Inc. shares (GGG) have gained 11% in 2019 on the back of stellar financial performance. However, trade tensions between the U.S. and China have resulted in many investors waiting on the sidelines. Despite weak global economic growth expected in the next couple of years, Graco's prospects are promising, especially from the perspective of an income investor. I expect Graco to hike its dividend per share multiple times in the next few years, resulting in the distribution of the bulk of its earnings. I do not see an imminent threat to Graco's dividend distributions and rate shares a safe buy for dividend investors.
Company Profile
Graco, Inc. is a global leader in manufacturing fluid and coatings management products. The company's products are used to handle materials with high viscosity, and corrosive or abrasive properties. These products have wide commercial and industrial applications. The firm operates under three business segments-industrial, process, and contractor-and has a presence in three geographical locations: Americas, Europe Middle East and Africa (EMEA), and the Asia Pacific. Its products include pumps, valves, meters, sprayers, and equipment used to apply coatings, sealants, and adhesives.
Industry Analysis
The industrial segment generates the largest portion of the company's revenues (47% in 2018). Products marketed by this division are used for applying paints and other coatings to motor vehicles, furniture, appliances, and... Read more