Dividend Aristocrats In Focus: Nordson Corporation

Up to date on March twenty sixth, 2024 by Bob Ciura

Every year, we individually evaluation every of the Dividend Aristocrats, a gaggle of 68 shares within the S&P 500 Index which have raised their dividends for not less than 25 consecutive years.

To make it on the listing of Dividend Aristocrats, an organization should possess a worthwhile enterprise mannequin with a helpful model, world aggressive benefits, and the flexibility to resist recessions. This is the reason the Dividend Aristocrats can proceed to lift their dividends in troublesome years.

With this in thoughts, we’ve got created a listing of all 68 Dividend Aristocrats.

You possibly can obtain your free copy of the Dividend Aristocrats listing, together with vital monetary metrics corresponding to price-to-earnings ratios and dividend yields, by clicking on the hyperlink under:

Disclaimer: Positive Dividend is just not affiliated with S&P World in any approach. S&P World owns and maintains The Dividend Aristocrats Index. The data on this article and downloadable spreadsheet relies on Positive Dividend’s personal evaluation, abstract, and evaluation of the S&P 500 Dividend Aristocrats ETF (NOBL) and different sources, and is supposed to assist particular person traders higher perceive this ETF and the index upon which it’s primarily based. Not one of the info on this article or spreadsheet is official information from S&P World. Seek the advice of S&P World for official info.

One of many three latest member to hitch this listing is Nordson Company (NDSN). Nordson has an unbelievable dividend progress observe file, with a outstanding 60 years of consecutive will increase.

This text will talk about the corporate’s enterprise overview, progress prospects, aggressive benefits, and anticipated returns.

Enterprise Overview

Nordson was based in 1954 in Amherst, Ohio by brothers Eric and Evan Nord, however the firm can hint its roots again to 1909 with the U.S. Automated Firm.

As we speak the corporate has operations in over 35 international locations and engineers, manufactures, and markets merchandise used for meting out adhesives, coatings, sealants, biomaterials, plastics, and different supplies, with purposes starting from diapers and straws to cell telephones and aerospace.

Supply: Investor Presentation

On February twenty first, 2024, Nordson reported first quarter outcomes for the interval ending January thirty first, 2024. (Nordson’s fiscal 12 months ends October thirty first.) For the quarter, the corporate reported gross sales of $633 million, a 4% improve in comparison with Q1 2023, pushed by a constructive acquisition impression, offset by natural lower of two%.

The Industrial Precision and Medical and Fluid Options noticed gross sales improve by 14% and three%, respectively, whereas the Superior Expertise Options phase had gross sales declines of (18%). The corporate generated adjusted earnings per share of $2.21, a 3% improve in comparison with the identical prior 12 months interval.

The corporate’s backlog equaled $750 million on the finish of the primary quarter. Administration diminished the highest finish of its gross sales progress steering to 4% to 7% (from 4% to 9% beforehand) for fiscal 2024 in comparison with fiscal 2023. Moreover, Nordson expects adjusted EPS for FY 2024 to be $10.00 to $10.50.

Development Prospects

From 2014 by means of 2023, Nordson grew earnings-per-share by a stable 10% yearly. In its funding thesis, Nordson lists components corresponding to best-in-class know-how that reinforces consumer manufacturing whereas slicing prices, a worldwide service mannequin, a balanced earnings stream, and a profitable observe file.

A rising demand for disposable items, productiveness investments, cell computing, a rise in the usage of medical gadgets, and the manufacturing of light-weight/lean autos are all areas of progress for the corporate’s adhesive and coating sectors, and would add to the corporate’s high line.

Nordson will maintain making acquisitions the place it may achieve entry to distinctive precision applied sciences and strengthen its aggressive benefit.

For instance, in 2023 Nordson accomplished its acquisition of the ARAG Group. ARAG is a worldwide market and innovation chief within the improvement, manufacturing and provide of precision management techniques and sensible fluid elements for agricultural spraying.

Supply: Investor Presentation

Our projection for 2024 earnings, primarily based on administration’s steering midpoint, is for $10.25 per share.

We additionally challenge 9.0% EPS progress over the subsequent 5 years, pushed by a rise in high line income, modest margin enlargement, and the favorable results of acquisitions.

Aggressive Benefits & Recession Efficiency

The aggressive benefit for Nordson lies in its proprietary precision applied sciences. The enterprise affords specialised and important elements utilized in varied manufacturing processes.

This has enabled Nordson to muster an monumental put in base of consumers unfold all around the world. Attributable to its in depth world presence, Nordson has been capable of diversify its income each geographically and by trade and phase.

Nonetheless, this doesn’t indicate that Nordson is proof against financial downturns. Earnings decreased by -32% for the 12 months in the course of the Nice Monetary Disaster earlier than quickly rising. Given the corporate’s reliance on world enlargement, one other recession may scale back its projections for near-term progress.

Valuation & Anticipated Returns

Nordson’s present price-to-earnings ratio is 26.1 primarily based on our 2024 forecasted earnings-per-share of $10.25. This valuation is barely elevated in comparison with the corporate’s trailing decade common P/E ratio of about 23.0. We consider that 24 instances earnings is an inexpensive truthful worth estimate for Nordson given its stable prospects.

Given shares commerce above our truthful worth estimate right this moment, Nordson inventory may expertise losses of roughly 1.7% per 12 months over the subsequent 5 years from a declining a number of.

Nordson additionally sports activities a 1% dividend yield. The dividend has elevated yearly for 60 years. Moreover, we forecast a payout ratio of solely 27% for 2024, leaving ample room for continued will increase within the years forward.

Combining the corporate’s 1% dividend yield with the 9.0% forecasted EPS progress fee, and the potential valuation headwind, we see Nordson inventory producing whole returns of 8.3% per 12 months within the intermediate time period. Consequently, Nordson receives a maintain score at the moment.

Closing Ideas

The corporate’s progress prospects appear promising, and Nordson has a powerful observe file by way of earnings and dividends prior to now. Nonetheless, the corporate is presently buying and selling at a excessive degree, which reduces the attractiveness of the inventory.

The corporate might proceed its unbelievable earnings-per-share progress this 12 months, or it could take a breather and stay flat. Nonetheless, we consider Nordson will proceed rising over the long-term. This long-term earnings progress, coupled with the very conservative dividend payout ratio, ought to see the corporate rising its dividend for a lot of extra years forward.

Moreover, the next Positive Dividend databases comprise probably the most dependable dividend growers in our funding universe:

In case you’re in search of shares with distinctive dividend traits, take into account the next Positive Dividend databases:

The key home inventory market indices are one other stable useful resource for locating funding concepts. Positive Dividend compiles the next inventory market databases and updates them month-to-month: