| Parker-Hannifin is the bluest of the blue in the eyes of dividend growth investors. This company has been raising its dividend annually for the last 57 years and this week they raised it once again another 31%. Parker-Hannifin is one of the premier companies on the list of Dividend Kings. The Dividend Kings are a select group and there's only one company (Diebold) that has been increasing its dividend longer and only three others (Dover Corp, Genuine Parts, and Proctor and Gamble) have been raising it an equal number of years. |  |
The Company
| Parker-Hannifin Corporation (PH) manufactures and sells motion and control technologies and systems for various mobile, industrial, and aerospace markets worldwide. It operates through two segments, Diversified Industrial and Aerospace Systems. The Diversified Industrial segment provides pneumatic, fluidic, and electromechanical components and systems; filters, systems, and diagnostics solutions to monitor and remove contaminants from fuel, air, oil, water, and other liquids and gases; connectors, which control, transmit, and contain fluid; hydraulic components and systems for builders and users of industrial and mobile machinery and equipment; critical flow components for process instrumentation, healthcare, and ultra-high-purity applications, as well as components for use in refrigeration and air conditioning systems, and in fluid control applications for processing, fuel dispensing, beverage dispensing, and mobile emissions; and static and dynamic sealing devices. This segment sells its products to original equipment manufacturers and their replacement markets in manufacturing, packaging, processing, transportation, mobile construction, refrigeration and air conditioning, agricultural, and military machinery and equipment industries. The Aerospace Systems segment offers flight control, hydraulic, fuel, fluid conveyance, and engine systems and components for commercial and military airframe, and engine programs. It also provides electronics thermal management heat rejection systems, and single-phase and two-phase heat collection systems for radar, ISAR, and power electronics. This segment markets its products directly to original equipment manufacturers and end users in the commercial and military aerospace markets. The company markets its products through direct-sales employees, independent distributors, and sales representatives. Parker-Hannifin Corporation was founded in 1918 and is headquartered in Cleveland, Ohio. (Daily Chart) (Weekly Chart) | 23 October Price $116.39 1yr Target $125.07 Analysts 15 1yr Cap Gain 7.45% Dividend $1.92 Yield 1.64% 1yr EST Tot Return 9.09% Market Cap $17.32 Bil Beta 1.57 EPS (ttm) $6.86 Payout Ratio 27.98% EPS next yr $8.60 P/E 16.97 PEG 1.65 Forward P/E 13.53 Debt/Equity 0.35 ROA 8.00% ROE 16.30% ROI 11.60% Sales $13.22 Bil Income $1.04 Bil Profit Margin 7.86% |
The Fundamentals
The fundamentals are pretty solid on this company, but that's to be expected from a Dividend King. Investors should note that the rate of growth in revenues and earnings have slowed during the last few years. This is down from those solid levels in the early part of the 2000s. Estimates for company growth rates going forward show revenues returning to the 3-5% level and earnings returning to the 11-12% level over the next couple of years (see below). In addition, dividends are estimated to grow at a rate in the low teens. These are solid numbers all across the board.
| Year 2016 Est 2015 Est 2014 2013 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003 | Revenues $14.13 Bil $13.56 Bil $13.21 Bil $13.01 Bil $13.14 Bil $12.34 Bil $9.99 Bil $10.30 Bil $12.14 Bil $10.71 Bil $9.38 Bil $8.21 Bil $7.10 Bil $6.41 Bil | Earnings $8.60 $7.67 $6.87 $6.26 $7.45 $6.37 $3.40 $3.13 $5.53 $4.67 $3.71 $3.34 $1.94 $1.12 | Dividends $2.75 $2.52 $1.89 $1.74 $1.58 $1.35 $1.03 $1.00 $0.88 $0.72 $0.63 $0.54 $0.51 $0.50 | Payout Ratio 31.97% 32.85% 27.51% 27.79% 21.20% 21.19% 30.29% 31.94% 15.91% 15.41% 16.98% 16.16% 26.28% 44.64% |
| Revenue Growth Rate 1 year = 1.53% 2 year = 0.26% 3 year = 2.27% 4 year = 7.23% 5 year = 5.10% 10 year = 6.40% | Earnings Growth Rate 1 year = 9.75% 2 year = -3.98% 3 year = 2.52% 4 year = 19.22% 5 year = 17.02% 10 year = 13.47% | Dividend Growth Rate 1 year = 8.62% 2 year = 9.37% 3 year = 11.74% 4 year = 16.38% 5 year = 13.57% 10 year = 14.22% |
The Technicals
The technicals are showing that this stock probably should have been bought two weeks ago when the overall market was getting trashed. As the market has come back, so has Parker-Hannifin. Fortunately the MACD is still below the zero line and moving up so I would expect the stock to continue higher from here. Personally I would look for a pullback to a point closer to the lower Bollinger Band. However, this is such a great and consistent company I would be buying this for the long term so I'd try to get the best price that I could but I wouldn't stress over trying to find the absolute bottom. Others obviously would differ with my me on these types of decisions.
 Daily Chart |  Weekly Chart |
The Competition
Parker-Hannifin Corporation is part of the Industrial Equipment and Components Industry which is part of the Industrial Goods Sector of the economy. Below are a few of the major corporations included in this industry. They each pay at least a minimal dividend and they are listed in the order of their market capitalization.
Conclusion
While there are other companies that have a better one year estimated capital gain and a better dividend yield, it's hard not to be interested in a company that's been growing its dividend for the last 58 years. And while I don't invest on faith, I've got to give this company the benefit of the doubt in forward looking estimates. I am in no hurry to begin accumulating this company since it has moved up from its recent lows, but I'm going to monitor this stock for future pullbacks. This is exactly the kind of company I want in my portfolio. I like companies that will continue to make money and pay dividends for years to come.
Live Interactive Chart
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