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Graco Raises Dividend by 7% As Home Improvement Spending Soars

Graco Inc. (GGG) is a leading manufacturer of fluid handling products that move, measure, control, dispense and spray a wide variety of fluids and powders.

The company generated 45% of its revenue from industrial products, 34% of its revenue from contractor products and 21% of its revenue from process-related products in 2019. While the company generated 58% of its revenue from the Americas, Europe and Asia accounted for 25% and 17% of sales, respectively, providing significant geographic diversification.

These figures dramatically shifted in 2020 amid the COVID-19 pandemic. During the third quarter of 2020, the company’s contractor segment grew 32.7% to $188 million, which represented about 43% of its revenue versus 34% in fiscal year 2019.

Record Sales Despite the Pandemic

Graco reported third quarter revenue that rose 10% to nearly $440 million along with operating earnings that rose 21% to $125 million. While industrial and process segments experienced pandemic-related weakness, robust demand from professional paint and home center channels more than offset those declines to yield record financial results.

Residential construction and home improvement spending has boomed during the pandemic, although these growth rates could slow as the economy normalizes. At the same time, the company could see pent up demand for industrial and process products during the middle to latter part of the year as capital spending normalizes.

The company raised its quarterly dividend by 7.1% to $0.1875 per share, which represents a 1.13% forward yield. The dividend is payable on February 3, 2021 to shareholders on record as of January 19, 2021.

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