Ecolab is in the Basic Materials sector, and within that, the industry of manufacturing cleaning chemicals, employs 45,000 people, and has a market capitalization of approximately $55 billion. ECL is a Dividend Aristocrat as it has raised its dividend every year for the past 34 years. Kudos! It also enjoys ‘Premier’ status being in the upper percentiles of this month’s universe of stocks. ECL is Fully Certified, 100% passing all Dividend System™ criteria.
Ecolab Inc (ECL) gets a 3.32 out of 5.0 in our quick analysis.
The dividend universe has an average dividend growth rate is 12.1%, vs ECL’s 5-year average dividend growth rate of 9.3%, so it is below average; it needs to make up for this in other areas. The current dividend yield is 0.96%, far below average; the average yield is 3.15%. To compensate for this lower than average yield, we’ll look for stellar growth.
Over the past 10 years, ECL has delivered an average annual return of 15.46%, and in the past five years, 11.71%. At that rate, your money would double every 6 years and 2 months. Combined with a Cash Flow Dividend Coverage Ratio of 4.39, Ecolab can weather a storm or two and still pay its dividend.
Having enough cash to pay and increase the dividend is critical. The best way to measure that is through cash flow. ECL’s free cash flow (FCF) has grown at an average rate of 9.7% per year for the last 10 years. Compared to the 8.2% FCF growth rate of our dividend universe, so Ecolab Inc is performing above average in terms of generating cash.
Ecolab Inc has achieved a reliability rating of 4.5 out of 5, (compared to the average of 1.8) and a Quality Rating of 3.4 (out of 5), vs. the average of 2.4. Right now, the Dividend Yield and Price/Earnings Ratio indicate that ECL is ‘Medium Buy Signal.’ It’s pricey with a PE ratio of 41.12 that is predicted to go higher. If you are of a value mindset this may not be for you. If you like to buy and hold, this stock is for you.
As the pandemic rolls into the sixth month with no signs of abating, the wave of intensive cleaning (even the NYC subway!) will keep Ecolab going strong. Based on our Dividend System™ standards, we rate Ecolab Inc a ‘A.’