This amazing company has the best balance of dividend growth, cash flow growth, book value growth, and total return. That’s why it’s Number One (#1) at the top of our “Top 20 Dividend Growth Stocks.” Cintas provides uniforms in North America, Latin America, Europe, and Asia. It rents and services uniforms and other garments, restroom cleaning services and supplies, and carpet and tile cleaning services, first aid and safety services. Founded in 1968.
Cintas Corp (CTAS) is ‘First Class,’ failing only 1 of 5 Dividend System criteria. It has ‘Premier’ status being in the upper percentiles of this month’s stock universe. The company increased dividends for 10 years, making it a Dividend Contender 10+. We consider CTAS to be a Growth stock.
GROWTH: CTAS’s 5-year average dividend growth rate is 24.6%, wonderfully high versus the dividend universe average of 12.4%. Free cash flow has grown at an average rate of 34.8% per year for the last 5 years versus the dividend universe at 8.3%, so CTAS is performing very well.
INCOME: CTAS’s current dividend yield is 1.02%, less than half of the average at 2.65%.
SAFETY: We use the Dividend Coverage Ratio to measure the dividend’s safety – higher is better. CTAS has a DCR of 4 which is very good, more than double the minimum of 2.
VALUATION: The price at time of analysis was $344.98, which we consider Overpriced. A fair price based on historical PE ratio and earnings would be around $189.6. The S&P500’s average PE ratio is 38.42, versus CTAS’s PE ratio of 38.65, around from 1% to 25% over the S&P 500 average PE. Our ‘Value Rating’ for Cintas Corp is 1 out of 5.0, meaning that both PS and PE indicate the stock is very expensive, compared to other dividend stocks available.
TIMING: Historical Yield and PE tell us that CTAS has ‘No ‘buy’ signal.’ Don’t eliminate a stock based on one factor (or lack thereof).
QUALITY: Our quality formula gives CTAS a ‘Quality Rating’ of 4.3 (out of 5), versus the average of 2.7 for this month’s dividend universe.
TOTAL RETURN: Over the last 15 years, the compound annual growth rate for an investment in Cintas Corp was 16.1% per year with dividends reinvested, versus the S&P500 Total Return of around 11% per year for the same time period. As you can see, CTAS is doing better than the market with dividends reinvested.
Compared to all dividend stocks paying 7 years or more of increasing dividends, we rate Cintas Corp a ‘A+.’
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