Kennametal Incorporated (KMT) is one of the highest paying dividend stocks. But a more pertinent question is whether it is one of the best dividend paying stocks. We will answer this question below.
Kennametal is a Pittsburgh-based supplier of tooling, engineered components, and advanced materials to customers across diverse sectors of industrial production, transportation, earthworks, energy, and even aerospace. KMT is in two segments, industrial and infrastructure; and it markets its products mainly under the brands Kennametal and WIDIA.
Since the Great Recession, KMT sales have increased, but only very slightly (especially when adjusted for the shares outstanding). Its profits and cash flows have not done much better. And its balance sheet appears to slightly weaker than it has been historically.
However, KMT has consistently paid a dividend and even increased that dividend in recent years. Furthermore, its cash flow from operations easily covers its dividends. And based on the most popular price multiples, KMT appears modestly priced (though this does not mean favorably priced).
We said that South Jersey Industries (SJI) was a very good company with good growth prospects, but the market had already factored these things into its stock price; consequently the stock deserved only an average rating. Kennametal is at the opposite end of the spectrum. KMT has inferior growth prospects and it is subpar on many other measures. However, it is selling at fairly low price multiples. These things offset. And similar to SJI, KMT also deserves an average rating.
Stat Sheet – Kennametal 4/11/16
|Industry||Misc. Capital Goods|
|Market Cap||$ 1,805|
|Growth Prospects||Below Average|
|Price Volatility||Above Average|
(Our assessment of this firm’s fundamentals will be in effect for the rest of calendar year 2016.)
In short, though KMT pays a high dividend yield, we do not consider it one of our top dividend paying stocks.
If you would like to see more “In Focus” reports (including some corresponding to stocks that we do consider our top dividend paying stocks), click the link below.
Disclaimer – Information contained herein has been obtained from sources believed to be reliable. Neither the author nor the publisher guarantees the accuracy or completeness of the information and methods described. This information is offered as general commentary only. It is not intended as investment advice. Investment and trading of securities involves risk, including of loss of capital. Market conditions change over time, and no assurance can be given that a reader may apply the principles described to make a profit. The author and publisher expressly disclaim all and any liability to any person for any investment or trading decisions that the reader may make in reliance on this information.