"Allegion (NYSE:ALLE) Could Be A Buy For Its Upcoming Dividend"

Allegion (NYSE: ALLE) has been a steady performer in the security products and solutions sector, and its upcoming dividend makes it an attractive option for income-focused investors. With a dividend yield of 1.55% and a payout ratio of 28%, Allegion offers a compelling mix of stability and growth potential. Let's dive into the details to see why Allegion could be a buy for its upcoming dividend.

A Decade of Dividend Growth

Allegion has a strong track record of dividend growth, having increased its payout for 11 consecutive years. This consistency is a testament to the company's financial stability and its commitment to returning value to shareholders. The dividend yield of 1.55% is slightly higher than the historical average of 1.3% over the last five years, indicating a positive trend. The company's dividend payout ratio of 28% is also lower than the Industrials sector average of 33.1%, suggesting that Allegion has ample room to continue growing its dividends.

Financial Performance and Market Conditions

Allegion's financial performance has been robust, with revenue and earnings per share (EPS) showing consistent growth. For the fiscal year 2024, the company reported revenue of $3.77 billion, up 3.3% from the previous year, and EPS of $6.82, an 11.4% increase. The company's available cash flow for 2024 was $582.9 million, an increase of 12.9%, providing a strong foundation for continued dividend payments.



Analyst Consensus and Price Targets

Analysts have given Allegion a "Hold" rating, with an average price target of $138.33, reflecting a 5.35% increase from the current stock price of $131.30. While the consensus rating is "Hold," the price targets suggest that there is potential for upside. The low estimate of $130 and the high estimate of $150 provide a range of possible outcomes, with the median target at $139, indicating a 5.86% increase.

Dividend Safety and Sustainability

Allegion's dividend safety metrics are strong, with a low payout ratio and a consistent history of dividend increases. The company's dividend payment history shows a steady increase in the annualized dividend per share (DPS), with an average growth rate of 6.67% over the past 12 months. This consistent growth, coupled with a low payout ratio, suggests that Allegion has the financial flexibility to maintain or even increase its dividends in the future.

Conclusion

Allegion's upcoming dividend, combined with its strong financial performance and consistent dividend growth, makes it an attractive option for income-focused investors. The company's low payout ratio and robust cash flow provide a solid foundation for continued dividend payments, while the "Hold" rating from analysts suggests that the stock is fairly valued. For investors looking for a steady income stream with growth potential, Allegion could be a buy for its upcoming dividend.