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The Dividend Kings are a select group of 57 stocks that have increased their dividends for at least 50 consecutive years. We believe the Dividend Kings are among the highest-quality dividend growth stocks to buy and hold for the long term.

With this in mind, we created a full list of all 57 Dividend Kings.

Each year, we individually review all the Dividend Kings. The newest member of the Dividend Kings list is Pentair plc (PNR), which recently increased its dividend for the 50th consecutive year.

This article will provide a more detailed analysis of the company.

Business Overview

Pentair is a pure-play water solutions company that operates in 3 segments: Aquatic Systems, Filtration Solutions, and Flow Technologies. Pentair was founded in 1966.

Pentair reported its third quarter earnings results on October 21. The company was able to generate revenue of $1.02 billion during the quarter, which was up 3% compared to the company’s revenues during the previous year’s quarter. Revenue that beat estimates slightly, by $10 million.

Core sales, which exclude the impact of currency rate movements, acquisitions, and dispossessions, were up 3% year over year as well, which was better than the core revenue growth rate during the previous quarter.

Pentair recorded earnings-per-share of $1.24 for the third quarter, which was up by 14% year-over-year. Pentair’s earnings-per-share beat the analyst consensus by $0.06.

Pentair updated its guidance for the current year during the earnings report: For fiscal 2025, Pentair is forecasting earnings-per-share of around $4.87, which indicates a substantial profit increase versus 2024.

Growth Prospects

Between 2008 and 2017 (before the nVent spin-off) Pentair grew its earnings-per-share by 6% annually, so underlying business growth has been solid. Following the spin-off of nVent after 2018, Pentair has also grown its earnings-per-share reliably and at a compelling pace.

Pentair’s management believes that a long-term earnings-per-share growth rate of 10% is possible, but we are a bit more conservative. It is, we believe, realistic to expect a ~7% earnings-per-share growth rate from Pentair over the coming years.

The company should be able to achieve this growth primarily due to rising revenues, which will be possible thanks to organic business growth in the global water technology and infrastructure market, and tuck-in acquisitions, which Pentair makes from time to time.

Tailwinds from margin expansion and share repurchases, which will lead to further declines in Pentair’s share count, will help as well.

Competitive Advantages & Recession Performance

Above-average operating efficiency is one of Pentair’s advantages over peers. The company employs a strategy called the Pentair Integrated Management System which has allowed its organizational structure to remain lean, and which has allowed the company to grow its already strong margins in the past.

Pentair is a leader in the markets it targets, and through tuck-in acquisitions, Pentair can grow its size and scale further.

Earnings-per-share performance during the Great Recession is below:

• 2007 earnings-per-share of $2.12
• 2008 earnings-per-share of $2.59 (22% increase)
• 2009 earnings-per-share of $1.17 (55% decline)
• 2010 earnings-per-share of $2.00 (71% increase)

When we adjust for the spin-off of nVent, Pentair’s dividend growth track record remains intact. The payout ratio is not high at all, which makes us believe that the dividend looks quite safe.

Even an earnings decline such as the one during the Great Recession would most likely not result in a dividend cut.

Valuation & Expected Returns

Using the current share price of $104 and expected earnings-per-share of $4.87 for the year, PNR stock trades for a price-to-earnings ratio of 21.4.

Pentair’s valuation has, on average, been in the high-teens range in the past, although Pentair traded at more than 20x net profit at times. We do believe that Pentair’s fair value multiple is 18, which is lower than the current valuation.

Therefore, it seems that PNR stock is overvalued. We expect a contracting valuation multiple to reduce annual returns by 3.4% over the next five years.

Aside from changes in the price-to-earnings ratio, future returns will be driven by earnings growth and dividend yields.

We expect 7% annual earnings growth over the next five years. In addition, PNR stock has a current dividend yield of 1.0%.

In total, we project that PNR stock will provide a total annual return of 4.6% over the next five years.

Final Thoughts

Pentair is a leading pure-play water/fluids company that should be able to grow through further tuck-in acquisitions and organic business expansion.

We believe that Pentair will be able to grow its earnings-per-share at a solid pace in the long run.

With expected annual returns in the mid-single-digits, PNR therefore is rated a hold right now.

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