Nordson Corporation: A 62-Year Legacy of Dividend Growth and Strategic Capital Deployment in Industrial Tech

Nordson Corporation (NASDAQ: NDSN) has once again cemented its status as a dividend aristocrat, announcing a 5% increase in its quarterly dividend to $0.82 per share on August 28, 2025. This marks the 62nd consecutive year of annual dividend growth—a feat achieved by only a handful of companies globally. For investors seeking compounding wealth through disciplined capital allocation, Nordson's strategy offers a masterclass in balancing growth, profitability, and shareholder returns in the industrial technology sector.

The Foundation of a 62-Year Streak: Free Cash Flow and Prudent Leverage

Nordson's ability to sustain dividend growth hinges on its exceptional free cash flow generation. In Q3 2025, the company reported $226 million in free cash flow, with a conversion rate of 180% of net income. This outperformance is driven by its high-margin business model, particularly in the Advanced Technology Solutions (ATS) and Medical & Fluid Solutions (MFS) segments. The ATS segment, for instance, achieved a 24% EBITDA margin in Q3, fueled by demand for electronics dispense systems and industrial automation tools.

Equally critical is Nordson's debt management. By reducing net debt from $2.5 billion to $2 billion in 2025, the company has maintained a leverage ratio of 2.2x EBITDA—well within its target range of 2.0x–2.5x. This financial flexibility allows Nordson to reinvest in growth while returning capital to shareholders. As of Q3 2025, the company had $793 million in remaining share repurchase authorization, reflecting its confidence in undervaluation and long-term growth prospects.

Strategic Acquisitions and Operational Excellence

Nordson's capital deployment strategy is not solely about returning cash to shareholders. The company has strategically allocated capital to high-growth opportunities, such as the 2024 acquisition of Atrion. This $1.2 billion deal expanded Nordson's footprint in medical fluid delivery systems, contributing to a 32% revenue increase in the MFS segment during Q3 2025. The acquisition's integration was completed ahead of schedule, demonstrating Nordson's operational discipline and enhancing its competitive edge in a sector projected to grow at 6% annually through 2030.

Complementing these acquisitions is Nordson's “in-region, for-region” manufacturing strategy. By relocating production to facilities like its South Carolina industrial coatings plant, the company mitigates supply chain risks and reduces currency exposure. This localized approach has also accelerated time-to-market for customers, a critical advantage in fast-moving industrial tech markets.

Shareholder Returns: Buybacks and Dividends in Harmony

Nordson's commitment to shareholder value is evident in its aggressive buyback program. In Q3 2025 alone, the company repurchased $71 million in shares, reducing its share count and boosting earnings per share (EPS). Over the past year, Nordson has returned $343 million to shareholders through dividends and buybacks, with a payout ratio of just 35% of free cash flow. This conservative approach ensures the sustainability of its dividend, even amid macroeconomic headwinds.

The dividend yield of 1.46% (as of August 2025) is modest but attractive for income-focused investors, particularly given Nordson's low beta of 0.89—a sign of its defensive characteristics in a volatile market. The recent 5% increase brings the dividend to $0.82 per share, translating to a 15% compound annual growth rate (CAGR) since 2020.

A Long-Term Vision: Innovation and Sector Diversification

Nordson's success is underpinned by its focus on innovation. The company's R&D investments have driven growth in high-margin areas like semiconductor packaging and noninvasive medical devices. For example, the ATS segment's 15% organic sales growth in Q3 2025 was driven by demand for precision dispensing systems in the electronics industry—a sector poised for 8% annual growth through 2030.

The company's portfolio rationalization further strengthens its long-term outlook. By exiting low-margin medical contract manufacturing and focusing on proprietary technologies, Nordson has reallocated capital to higher-growth opportunities. This strategic clarity is reflected in its 2025–2029 financial targets: 6–8% annual revenue growth and 10–12% adjusted EPS growth.

Investment Implications and Risks

For investors, Nordson represents a rare combination of defensive qualities and growth potential. Its diversified industrial tech exposure, strong balance sheet, and disciplined capital allocation make it a compelling long-term holding. However, risks include macroeconomic slowdowns in key sectors like industrial coatings and polymer processing, which account for 55% of revenue.

Conclusion: A Model for Compounding Wealth

Nordson Corporation's 62nd consecutive year of dividend increases is not a fluke—it is the result of a 61-year commitment to compounding shareholder value through strategic acquisitions, operational excellence, and disciplined capital returns. As the industrial technology sector evolves, Nordson's focus on innovation and localized manufacturing positions it to outperform peers and deliver sustained growth. For investors seeking a high-quality, dividend-growing compounder, Nordson remains a standout choice.