Dividend Kings In Focus: Parker-Hannifin

Updated on July 9th, 2025 by Felix Martinez

Parker-Hannifin (PH) is in very exclusive company when it comes to its dividend track record. Parker-Hannifin has paid quarterly dividends to shareholders for over 70 years and has raised its dividend for 69 consecutive years.

Given that, Parker-Hannifin has one of the top five longest-running dividend increase streaks in the S&P 500 Index.

This remarkable achievement places it among the elite Dividend Kings, a group of stocks that have increased their payouts for at least 50 consecutive years.

You can see the full list of all 55 Dividend Kings here.

Additionally, you can download your free copy of the entire Dividend Kings list (along with metrics that matter like price-to-earnings ratios and dividend yields) by clicking on the link below:

Dividend Kings are the best of the best when it comes to rewarding shareholders with higher cash returns each year.

This article will discuss Parker-Hannifin’s qualities that have put it in such rare company.

Business Overview

Parker-Hannifin was founded in 1917 by Art Parker, an entrepreneurial man in every sense of the word.

He leveraged his expertise in solving engineering problems to file over 160 patents, laying the foundation for what Parker-Hannifin has become today.

The company continues to embody Mr. Parker’s approach to solving the world’s engineering problems, and the formula has certainly worked over the past several decades.

Parker-Hannifin sells a wide array of components that help power the world’s factories and machines. A key part of the company’s appeal is its broad diversification across various product categories and offerings.

The company has a very long and diverse customer list and is not reliant upon one or two industries for its revenue and profits. Indeed, Parker-Hannifin is one of the most diversified industrial stocks.

Source: Investor Presentation

Parker-Hannifin’s market capitalization is $90 billion, and the company has generated $20 billion in revenue in the last 12 months.

The company operates in three major segments called Industrial North America, Industrial International, and Aerospace Systems.

The North America business is the largest segment of the three. This segment offers industrial solutions to engineering problems on a massive scale, encompassing valves and fittings, cylinders and actuators, hoses, piping, tubing, and a range of other product categories.

The International business provides the same sort of solutions to its customers outside the US.

The Aerospace Systems business focuses on an industry where Parker-Hannifin has decades of experience in making the world’s aircraft more efficient and safer to operate.

About two years ago, Parker-Hannifin acquired Meggitt, a global leader in aerospace and defense motion and control technologies, for $8.8 billion in cash. Meggitt offers technology and products on every major aircraft platform and has annual revenues of $2.3 billion.

As the transaction value was 23% of Parker-Hannifin’s market capitalization at the time of acquisition, it will undoubtedly be a significant growth driver for the company in the years to come.

Growth Prospects

Thanks to its focus on its niche markets, Parker-Hannifin has exhibited an admirable performance record. The company has grown its earnings per share by 12.5% per year on average over the last 10 years.

The consistent performance, combined with the company’s high growth rate, is a testament to its rock-solid business model.

Parker-Hannifin has achieved this outstanding performance record primarily due to its ability to acquire smaller competitors, integrate their products into its extensive global network, and realize significant synergies from these acquisitions.

Parker-Hannifin has consistently maintained a strong financial position, ensuring sufficient cash for highly profitable acquisitions.

Parker Hannifin Corporation reported Q3 2025 net income of $961 million ($7.37 per diluted share), up 32% from $726.6 million ($5.56 per share) in Q3 2024. Adjusted net income was $904 million ($6.94 per share), up 6%, excluding items like acquired intangible amortization and a discrete tax benefit. Net sales fell 2.2% to $5.0 billion, with 0.9% organic growth offset by divestitures (-2.1%) and currency (-1%). Segment operating margin rose to 23.2% (adjusted 26.3%), up 170 and 160 basis points, respectively, while YTD operating cash flow grew 8% to $2.3 billion (15.8% of sales).

Segment performance included Diversified Industrial North America, which saw a 9% sales decline to $2.03 billion (organic -3.5%), but achieved a record adjusted operating margin of 25.2%. Diversified Industrial International reported a 5.3% decline in sales to $1.36 billion (organic decrease of 2.8%), alongside a record adjusted margin of 25.1%. Aerospace Systems sales rose 11.6% to $1.57 billion, achieving a record adjusted margin of 28.7%, driven by aftermarket strength and a $7.3 billion backlog. Order rates increased 9%, with Aerospace up 14%.

The company repurchased $650 million in shares and raised its dividend by 10%. FY 2025 guidance projects flat sales (1% organic growth), a segment operating margin of ~22.7% (adjusted to ~25.9%), and EPS of $25.92–$26.12 (adjusted to $26.60–$26.80), with tariff impacts expected to be offset. CEO Jenny Parmentier emphasized record margins and cash flow, crediting The Win Strategy for resilience amid economic uncertainties, which has positioned Parker Hannifin to meet its FY 2029 targets.

Parker-Hannifin has made some significant acquisitions in recent years, with CLARCOR, Lord, and Exotic Metals being three examples. More recently, the company completed an important acquisition of Meggitt for $8.8 billion.

The company’s focus on supportive acquisitions, combined with improvements in its operating efficiency, should provide it with strong long-term earnings growth.

Competitive Advantages & Recession Performance

Parker-Hannifin’s competitive advantages include its scale, global distribution network, and its 100+ years of experience in solving engineering problems.

The company manufactures some relatively obscure – but critical – components for heavy machinery, factory equipment, and aircraft, among other applications, and competition in many of these arenas is limited. As a result, it enjoys a wide business moat and strong pricing power.

Of course, as an industrial manufacturer, Parker-Hannifin is not immune to recessions. After all, its customers need customers of their own in order to justify production. Consequently, when a recession strikes, Parker-Hannifin is significantly affected.

During the Great Recession, revenue declined from approximately $12 billion before the downturn to around $9 billion at its lowest point.

Naturally, this had a corresponding negative impact on earnings per share in 2009, as shown below:

2007 earnings-per-share of $4.67
2008 earnings-per-share of $5.53 (18% increase)
2009 earnings-per-share of $3.13 (43% decline)
2010 earnings-per-share of $3.40 (8.6% increase)

However, revenue recovered to pre-crisis highs by 2011, and the company recovered swiftly from that recession.

This company isn’t beholden to any one particular industry, and that diversification of product offerings and customers is what helps it weather economic storms.

Given these factors, we see its dividend as very safe, regardless of future economic conditions.

Valuation & Expected Returns

Based on $26.70 in earnings per share for this year, shares of Parker-Hannifin trade for a forward P/E ratio of 26.5. This is well above our fair value P/E of 16.4, indicating that the stock is currently overvalued.

We note that Parker-Hannifin has traded with significantly varying price-to-earnings multiples in the past decade. Still, over the next five years, we expect the current valuation to result in a -9% annual headwind to total returns.

Parker-Hannifin’s dividend history is obviously very impressive, and that has been made possible by the company’s outstanding free cash flow generation over time.

Even when the global economy was significantly challenged, Parker-Hannifin posted strong cash flow. This provides a significant margin of safety for the dividend, and we believe Parker-Hannifin’s payout is exceptionally safe as a result.

If we assume long-term earnings growth of 9% and add in the current yield of 1.0%, Parker-Hannifin’s total expected return over the next five years is 1.0%.

We continue to think Parker-Hannifin has promising prospects ahead. However, after years of being undervalued by the market, the stock has rallied 46% in the last 12 months and has become overvalued.

The stock receives a marginal hold rating. Prospective investors should probably wait for a lower entry point.

Final Thoughts

Parker-Hannifin is not a high dividend stock, and it almost certainly never will be. But its dividend track record is impressive, and it appears that it will continue for years to come.

The company utilizes its free cash flow to reward investors through a decent yield that grows over time, as well as through strategic acquisitions and business investments.

The stock has rallied 46% over the past 12 months, earning it a marginal hold rating. However, it will be upgraded to “buy” if it experiences a meaningful correction from its current price.