Stock Analysis - Danaher Corp (DHR)

Below you can find an overview of Danaher's Segment Revenue and Results from Danaher's 2019 Annual Report:

Danaher Revenue 2019

This graphic illustrates each of the business units' global footprint as well as figures to show stability the company offers through recurring revenue.

Dividend Growth and Sustainability

Danaher’s current dividend yield as of 01/05/2021 is 0.31%, a low starting point and below their 5-year average yield of 0.55%.

The following section will cover some history on and judge the sustainability of Danaher’s dividend by examining the payout ratio as well as its growth to determine whether the conglomerate makes a compelling case for dividend growth investors.

Dividend History & Growth

Danaher has paid a quarterly dividend since 1993 and has steadily increased it since 2014. The 7 years of consistent dividend growth award the company the status of a US Dividend Challenger (Companies with Dividend Growth streaks between 5 and 10 years).

Reflecting on the last decade, between 2011 and 2021, the dividend per share has been increased by 700%, with the latest dividend increase being announced on Feb 20, 2020. You may think that his high growth rate would lead to a high yield, but shares of Danaher Corp equally appreciated in price leading to a current starting yield of only 0.32%.

As a dividend growth investor, you will have to ask yourself about your investing horizon and if the high growth of Danaher's dividend is worth it considering the very low starting yield.

Payout Ratio

Between 2011 and 2021, Danaher’s dividend payout ratio has remained below 20% with a lot of room to grow the dividend based on their earnings. From a payout ratio standpoint alone I would consider the dividend as safe but due to the nature of the business Danaher needs to retain some of their earnings for future mergers and acquisitions to drive their business.

Financial Snapshot

Using the Piotroski F-Score to measure Danaher Corp’s current financial health, we see it secures a 6 in the 0-9 ranking. This rating is slightly above average for similar healthcare conglomerates in this sector.

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Disclaimer: I do hold a position in Danaher Corporation (NYSE: DHR). In 2020 it has emerged as one of my biggest holdings in the healthcare ...

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Harry Goldstein 2 months ago Member's comment

Good analysis on $DHR, thanks.

Just-Dividends 2 months ago Author's comment

Thank you for the kind words