- Cintas is a Dividend Aristocrat on track for Dividend King status.
- It comes with a low yield but a high amount of safety.
- The Cintas dividend is growing at a fast pace, as well, and the stock is responding.
Want to know more about Cintas Dividend? It's not surprising, this is a high-quality blue-chip dividend-growing stock and that can be seen in CTAS stock price. Before reaching the end of this article you will know everything you need to know about Cintas and its dividend. The key takeaways are that Cintas is a Dividend Aristocrat, the company is growing the business and the outlook for dividend growth is as good as the company has ever had.
CTAS Stock Overview
Cintas is a US-based business services company. The company’s core business is uniform rentals and it is rounded out with other services including mats, shop towels, rags, first aid and safety equipment. The company operates on a territory-route basis with processing facilities in centralized locations. The company’s growth strategy involves expanding into new territories, deepening penetration of existing territories and adding ancillary services.
Growth and IPO
Cintas got its start in 1929 as the Acme Industrial Laundry Company which was in business to recycle used rages from factories. The family-run operation grew and evolved over the decades to become Cintas in 1972. The company went public in 1983 and the rest is dividend history.
Acquisitions and Investments
Cintas has made many acquisitions over the years but the two most important are Zee Medical and G&K services. Zee Medical was a business with an overlapping territory and need so was an easy fit for the company, it was acquired in 2015. G&K Services was a competing business with businesses in adjacent territories that helped to accelerate growth.
CTAS Payout History (Paid, Declared and Estimated)
Cintas has been paying a regular quarterly dividend for more than 38 years and has increased it on an annual basis for the same amount of time. The dividend is declared each quarter and increased annually at the end of the fiscal year.
CTAS Dividend Stability and Growth
Cintas's dividend is stable and growing. The company is a Dividend Aristocrat and on track to become a Dividend King. How to choose between a Dividend King vs aristocrat? You be the judge but both are great income stocks for safety-loving investors.
CTAS Dividend Yield vs Industry/Market
Cintas's dividend yield is low relative to the broad market and even some of its competitors but that is offset by distribution safety and distribution growth.
Price History and Performance
Cintas's price history is marked by volatility, it is a higher-beta stock at 1.37X the S&P 500, but that is volatility within a marked uptrend. The combination of acquisitional growth, organic growth and dividend growth has helped to attract high levels of ownership among the general market and the institutions. The institutions owned more than 75% of the stock in late 2022 and that figure was on the rise. In regard to performance, Cintas stock price rose more than 1000% from 2014 until after the COVID-19 pandemic and that was compounded by the dividend. The yield is low at roughly 1.0% per share but that is offset by regular annual distribution increases that are helping to drive the stock price higher.
Cintas Dividend Safety
Cintas dividend is as safe as they come on Wall Street. The company’s history speaks volumes and it is backed up by a low payout ratio, low leverage and ample free cash flow.
Cintas Yield Attractiveness
Cintas's 1.0% dividend yield isn’t all that attractive on its own but it is a nice addition to the total-return scenario. In regard to total returns, Cintas tends to deliver double-digit compounded annual total returns over the long term.
Cintas Risk and Potential
The two risks in Cintas are labor market implosion and competition. The competition is out there but it is not hurting the business. Labor market implosions are possible but even so, Cintas has weathered that storm before and come out swinging. The potential is the company will expand into international markets and grow the business by another triple-digit figure.
Dividend Payout Ratio
CTAS stock dividend payout ratio is one of several important metrics for investors to follow. The payout ratio is the measure of how much earnings are being paid as a dividend. Cintas tends to run with a payout ratio in the mid-30% range because it tries to manage its dividend increases to be in line with earnings growth. This strategy has allowed it to achieve nearly 40 years of consecutive increases while maintaining a low leverage ratio as well as a low payout ratio.
CTAS vs Specialty Business Service Stocks
Cinats is a specialty business service stock but, unlike its peers in this category, it is not a niche player and it is also a blue-chip operator with a well-entrenched nationwide presence. Cintas has competition but players like Sysco, Aramark and Ecolab are not pure plays nor do they have the focus to dominate the uniform rental industry.
CTAS Dividend Growth CAGR
Cintas dividend growth CAGR is an important metric to be aware of. The CAGR is the compound annual growth rate for the dividend distribution and can be a deciding factor for investors. The CAGR is not a guarantee of how large future dividend increases will be but it, along with the payout ratio, leverage ratio and FCF ratio can be an indication. Cintas's CAGR hit the high-20% range in the wake of the COVID-19 pandemic which is a high rate for a Dividend Aristocrat. At this rate, investors should expect the pace to slow in the coming years but not for distribution increases to stop. The bottom line, Cintas is a good candidate with which to easily build a large dividend stock portfolio.
Dividend Capture Strategy for CTAS
The dividend capture strategy is easy to understand but hard to execute with precision. The strategy aims to capture the Cintas stock dividend by buying as close to the ex-dividend date as possible and then selling on the ex-dividend or soon after.
The Date of Record is the day after the ex-dividend day. It is the day the company records eligible owners.
Anyone who wants to get the dividend has to own the stock before the ex-dividend day, at the close of business, or else they are not eligible. That day is announced with the dividend declaration. The next day, however, the day of record, investors are free to sell the stock which is why the strategy is so appealing.
The problem is the market knows about this opportunity, and many traders attempt to capture dividends. This means the stock price may run up ahead of the ex-dividend day and then fall back sharply on the date of record. Ultimately, it’s better to buy dividend stocks for income.
Cintas, For Uniform Returns
When it comes to blue chip stocks and dividend yields Cintas isn’t a high-yielding stock but it is a steady name with a very bright outlook for dividend increases. You may only get about 1.0% in yield but, with each annual increase the yield on the original dollar increases and helps to offset inflation. Regardless, investors looking for safe, steady income can get uniform returns with Cintas stock.
Cintas Dividends FAQ
Cintas isn’t a Dividend King but that doesn’t matter, it will be soon but until then it is a Dividend Aristocrat and one that could be included on a list of ten dividend stocks to hold for your lifetime.
Does Cintas pay a dividend?
Yes, Cintas pays a dividend. The company is a well-known dividend grower as well and is included in the Dividend Aristocrats index.
How much is Cintas’ dividend?
Cintas is a Dividend Aristocrat which means its dividend payout is growing. In regard to the yield, the stock tends to yield about 1.0% as price action moves up to match the payout.
Is Cintas’ dividend stable?
Cintas's dividend is not stable in the sense that it is a static amount. The dividend payout is increasing on an annual basis but the yield tends to hover around 1.0% which means the stock price rises to match each new dividend increase.
Is Cintas’ dividend showing long-term growth?
Yes, Cintas's dividend is showing long-term growth. The company is a Dividend Aristocrat with more than 38 years of dividend increases in its history and the earnings power to continue raising the dividend for several more decades.
Does Cintas have sufficient earnings to cover its dividend?
Yes, Cintas has sufficient earnings to cover its dividend. The company was running with a 35% payout ratio in 2022 which is low for a Dividend Aristocrat with so many years of increases. The leverage ratio is also very low at 0.77X which says the balance sheet is healthy too.
Companies Mentioned in This Article:
|Company||Current Price||Price Change||Dividend Yield||P/E Ratio||Consensus Rating||Consensus Price Target|
|Cintas (CTAS)||$436.35||+0.7%||1.05%||35.50||Moderate Buy||$476.10|