TORO CO (NYSE:TTC) – A Reliable Dividend Stock with Solid Fundamentals

TORO CO (NYSE:TTC) stands out as a strong candidate for dividend investors, according to our Best Dividend Stocks screen. The company combines a reliable dividend history with solid profitability and reasonable financial health, making it an appealing option for income-focused portfolios.

Dividend Strength

• Yield & Growth: TTC offers a 2.00% dividend yield, slightly above the industry average of 1.83%. More importantly, it has consistently increased its dividend at an average annual rate of 9.97% over the past decade.
• Sustainability: The payout ratio sits at 37.79%, indicating that earnings comfortably cover dividend payments. However, investors should note that earnings growth has slowed compared to dividend growth, which could require monitoring.
• Track Record: TTC has maintained dividend payments for at least 10 years without reductions, reinforcing its reliability.

Profitability & Financial Health

• Strong Returns: The company delivers a Return on Equity (ROE) of 27.01%, outperforming 92% of its peers in the machinery industry. Its Return on Invested Capital (ROIC) of 15.50% also ranks well above average.
• Margins: TTC maintains healthy margins, with an 8.77% net profit margin and an 11.21% operating margin, both competitive within its sector.
• Financial Stability: While TTC carries some debt (Debt/Equity of 0.73), its Altman-Z score of 4.35 suggests low bankruptcy risk. Free cash flow covers debt obligations well, with a Debt/FCF ratio of 2.41.

Valuation Considerations

TTC trades at a P/E ratio of 17.55, below the S&P 500 average (27.50) and cheaper than 73% of industry peers. Its forward P/E of 15.74 suggests reasonable pricing relative to future earnings.

For a deeper dive into TTC’s fundamentals, review the full report here.

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Disclaimer
This is not investment advice. Always conduct your own research before making investment decisions.