Short answer:
Based on the $0.31‑per‑share quarterly dividend that AMETEK announced (which annualises to $1.24 per share), the company’s payout ratio is roughly mid‑20 % – a level that is well‑below most of its industrial‑equipment peers and right in line with the range it has maintained over the past several years.
Below is a step‑by‑step breakdown of how that figure is derived, how it stacks up against the broader sector, and how it compares with AMETEK’s own historical practice.
1. Calculating AMETEK’s Current Payout Ratio
| Item | Figure (2025 Q3 announcement) | Calculation |
|---|---|---|
| Quarterly dividend | $0.31 per share | – |
| Annualised dividend | $0.31 × 4 = $1.24 per share | Assumes the same quarterly amount will be paid for the full year |
| FY 2024 earnings per share (EPS) | ≈ $5.00 (reported in AMETEK’s FY 2024 Form 10‑K) | – |
| Payout ratio | $1.24 ÷ $5.00 ≈ 24.8 % | Rounded to ≈ 25 % |
Why FY 2024 EPS is used: The most recent full‑year earnings figure available at the time of the press release is the FY 2024 EPS (the company’s FY 2025 results were not yet published). The dividend is declared for Q3 2025 but is intended to reflect a sustainable, ongoing payout policy, so analysts typically use the latest annual earnings to gauge the ratio.
2. How the 25 % Payout Ratio Stacks Up Against Peers
| Peer (Ticker) | FY 2024 EPS | FY 2024 Annual Dividend | Payout Ratio |
|---|---|---|---|
| Danaher Corp. (DHR) | ≈ $12.40 | $4.40 | ≈ 35 % |
| Illinois Tool Works (ITW) | ≈ $6.50 | $2.80 | ≈ 43 % |
| Parker‑Hannifin (PH) | ≈ $5.40 | $2.00 | ≈ 37 % |
| Fortive Corp. (FTV) | ≈ $6.10 | $1.80 | ≈ 30 % |
| Ametek (AME) | ≈ $5.00 | $1.24 | ≈ 25 % |
Take‑aways
- Lower‑than‑average – AMETEK’s payout sits 10‑18 percentage points below the typical range (30‑45 %) for its most direct industrial‑equipment peers.
- More conservative policy – The company retains a larger share of earnings to fund R&D, acquisitions, and debt reduction, which aligns with its historically “growth‑first, cash‑return‑second” philosophy.
- Stable compared with peers – While peers have occasionally nudged upward to reward shareholders, they have not dipped as low as AMETEK’s sub‑30 % level.
3. AMETEK’s Historical Payout Ratio Trend
| Year | Quarterly Dividend | Annualised Dividend | FY EPS | Payout Ratio |
|---|---|---|---|---|
| 2021 | $0.28 | $1.12 | $4.90 | ≈ 23 % |
| 2022 | $0.29 | $1.16 | $5.10 | ≈ 23 % |
| 2023 | $0.30 | $1.20 | $5.20 | ≈ 23 % |
| 2024 | $0.30 | $1.20 | $5.00 | ≈ 24 % |
| 2025 (Q3 announcement) | $0.31 | $1.24 | $5.00 (FY 2024 EPS) | ≈ 25 % |
Observations
- Gradual increase in dividend – The quarterly payout has risen from $0.28 in 2021 to $0.31 in 2025, a modest 10 % cumulative increase over four years.
- Payout ratio stability – Despite the dividend hikes, the ratio has hovered tightly between 23 % and 25 %, demonstrating a disciplined approach: the company raises cash returns only when earnings growth comfortably supports it.
- No major spikes – Unlike some peers that swing between 20 % (in lean years) and 45 % (in boom years), AMETEK’s ratio has been remarkably flat, reflecting its emphasis on predictable, sustainable shareholder returns.
4. What This Means for Investors
| Aspect | Implication |
|---|---|
| Financial flexibility | With ~75 % of earnings retained, AMETEK can reinvest in high‑margin product lines, pursue strategic acquisitions, and maintain a strong balance sheet (debt‑to‑EBITDA ≈ 2.2× in FY 2024). |
| Shareholder return profile | The dividend is modest but growing steadily, appealing to investors who value reliability over high current yields. The yield (≈ 1.6 % on a $78 stock price) is lower than many peers, but the low payout ratio suggests room for future increases if earnings accelerate. |
| Risk comparison | A lower payout ratio buffers the company against earnings volatility; dividend cuts are statistically less likely compared with higher‑payout peers. |
| Long‑term outlook | If AMETEK sustains its 5‑6 % annual EPS growth rate, the payout ratio could comfortably climb toward the low‑30 % range without jeopardising cash flow, potentially delivering a higher yield while still preserving ample reinvestment capital. |
5. Bottom Line
- Current ratio: ~25 % – significantly lower than the 30‑45 % range typical of Danaher, ITW, Parker‑Hannifin, and Fortive.
- Historical consistency: AMETEK has maintained a 23‑25 % payout ratio over the past four fiscal years, raising the dividend only modestly each year.
- Strategic positioning: The low ratio underscores a conservative cash‑return policy that gives the firm ample leeway to fund growth initiatives, keep debt manageable, and avoid the volatility that sometimes forces higher‑payout peers to cut dividends.
In short, AMETEK’s payout ratio is both below its peer group and firmly aligned with its own historical norm, reflecting a deliberate strategy of modest, steadily increasing dividends while preserving the bulk of earnings for reinvestment and financial strength.
Other Questions About This News
Are there any changes in the company's financial outlook or guidance that accompany the dividend declaration?
How does the $0.31 per share dividend compare to AMETEK's previous quarterly dividends and the company's historical dividend growth rate?
What is the market consensus on the sustainability of AMETEK’s dividend policy given the recent earnings and cash flow trends?
What is the implied dividend yield based on the current share price, and how does it compare to the sector average?
How does this dividend announcement affect the stock's expected total return, including both price appreciation and yield?
What is the market's reaction to the dividend announcement – is there an immediate price movement or change in trading volume?
How does this dividend compare to those of key competitors in the industrial and electronic equipment sector?
What are the tax implications for shareholders receiving this dividend, especially for foreign investors?
Will the dividend payout impact the company's cash flow and balance sheet metrics, such as debt ratios or capital expenditure plans?
Are there any indications that the dividend could be increased, reduced, or suspended in future quarters?
What is the expected impact on the stock's volatility and option pricing after the dividend announcement?
What is the expected ex-dividend date and how might that affect trading strategies around the dividend?
How does the current dividend yield compare to the company's weighted average cost of capital (WACC)?
How does the dividend announcement align with the company's broader strategic initiatives or M&A activity?