A quarter of a century is a long time in which many things can go wrong, even for a dividend aristocrat. Even if the company continues to compound its dividend at the rate it has done over the past decade, the yield a quarter century from now will still only be 3.8%. With a record of annual dividend increases stretching back over more than four decades, that is understandable.īut at the present share price, the dividend yield is only 0.9%. The Dividend Story is Great but not LucrativeĪs a dividend aristocrat, Halma gets a lot of attention. Although the market for alarms and similar equipment is significantly driven by necessity, it could still well slow down amid an economic downturn as customers push back or cancel non-essential work. That does not mean there are not risks, though.
The end market should remain strong and Halma's mix of brands, reputation, specialist services and repeat custom along with the necessity nature of the product should support ongoing profitability at an attractive level. I think this model will continue to do well in the future. Halma shareholder return (company annual report 2022) Unsurprisingly, this sterling business performance continues to be rewarding for long-term shareholders, as the following chart shows. Table calculated and compiled by author using data from company annual reports (some figures have been restated) That helps explain why the dividend is currently covered a conservative 3.5 times by earnings. Not only that, but the dividend growth has actually been slower though still solid. Looking back over the past decade it has grown revenue 8% on a compounded annual basis and basic earnings per share at 10% compounded. It has excellent pricing power (its net margin last year was 16.3%). It has honed its acquisition model over many years. It is in an area with strong, durable consumer need and pricing power. I continue to think that the Halma business model is highly attractive.
That is a solid performance all round yet again and the management deserves credit for an excellent performance even though the company has made a habit of it. The profit was a record for the 19th consecutive year, while the dividend was raised by 5% or more (in this case, 7%) for the 43rd consecutive year. Halma turned in another set of record results last year. Halma Continues to have Strong Growth Prospects I continue to like the business a lot but still regard its shares as overpriced. dividend aristocrat Halma ( OTCPK:HLMAF) has seen its share price slide.
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