Why EATON CORP PLC (NYSE:ETN) provides a good dividend, while having solid fundamentals.

EATON CORP PLC (NYSE:ETN) was identified as a stock worth exploring by dividend investors by our stock screener. ETN scores well on profitability, solvency and liquidity. At the same time it seems to pay a decent dividend. We'll explore this a bit deeper below.

A Closer Look at Dividend for ETN

ChartMill assigns a proprietary Dividend Rating to each stock. The score is computed by evaluating various valuation aspects, like the yield, the history, the dividend growth and sustainability. ETN was assigned a score of 7 for dividend:

• Compared to an average industry Dividend Yield of 4.55, ETN pays a better dividend. On top of this ETN pays more dividend than 88.66% of the companies listed in the same industry.
• ETN has paid a dividend for at least 10 years, which is a reliable track record.
• ETN has not decreased their dividend for at least 10 years, which is a reliable track record.
• 39.54% of the earnings are spent on dividend by ETN. This is a low number and sustainable payout ratio.
• The dividend of ETN is growing, but earnings are growing more, so the dividend growth is sustainable.

Health Analysis for ETN

ChartMill employs its own Health Rating for stock assessment. This rating, ranging from 0 to 10, is calculated by examining various liquidity and solvency ratios. In the case of ETN, the assigned 7 reflects its health status:

• ETN has an Altman-Z score of 5.11. This indicates that ETN is financially healthy and has little risk of bankruptcy at the moment.
• The Altman-Z score of ETN (5.11) is better than 87.63% of its industry peers.
• The Debt to FCF ratio of ETN is 2.60, which is a good value as it means it would take ETN, 2.60 years of fcf income to pay off all of its debts.
• ETN's Debt to FCF ratio of 2.60 is fine compared to the rest of the industry. ETN outperforms 77.32% of its industry peers.
• A Debt/Equity ratio of 0.46 indicates that ETN is not too dependend on debt financing.
• The current and quick ratio evaluation for ETN is rather negative, while it does have excellent solvency and profitability. These ratios do not necessarly indicate liquidity issues and need to be evaluated against the specifics of the business.

Analyzing Profitability Metrics

ChartMill employs its own Profitability Rating system for stock evaluation. This score, ranging from 0 to 10, is derived from an analysis of diverse profitability metrics and margins. In the case of ETN, the assigned 9 is noteworthy for profitability:

• Looking at the Return On Assets, with a value of 9.89%, ETN belongs to the top of the industry, outperforming 93.81% of the companies in the same industry.
• Looking at the Return On Equity, with a value of 20.52%, ETN belongs to the top of the industry, outperforming 91.75% of the companies in the same industry.
• ETN's Return On Invested Capital of 12.88% is amongst the best of the industry. ETN outperforms 93.81% of its industry peers.
• The last Return On Invested Capital (12.88%) for ETN is above the 3 year average (10.83%), which is a sign of increasing profitability.
• The Profit Margin of ETN (15.25%) is better than 97.94% of its industry peers.
• In the last couple of years the Profit Margin of ETN has grown nicely.
• Looking at the Operating Margin, with a value of 18.88%, ETN belongs to the top of the industry, outperforming 96.91% of the companies in the same industry.
• In the last couple of years the Operating Margin of ETN has grown nicely.
• ETN has a better Gross Margin (38.20%) than 86.60% of its industry peers.
• In the last couple of years the Gross Margin of ETN has grown nicely.

Every day, new Best Dividend stocks can be found on ChartMill in our Best Dividend screener.

Our latest full fundamental report of ETN contains the most current fundamental analsysis.

Keep in mind

Important Note: The content of this article is not intended as trading advice. It is essential to perform your own analysis and exercise caution when making trading decisions. The article presents observations created by automated analysis but does not guarantee any trading or investment outcomes. Always trade responsibly and make independent judgments.