Allison Transmission Set to Pay $0.25 Dividend, Yielding 1.3%

Allison Transmission Holdings Inc. is set to trade ex-dividend on May 17, 2024, with a $0.25 per share dividend payment on May 31, 2024. The company has a strong dividend track record, with a 7.6% average annual increase over the past decade.

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Bijay Laxmi
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Allison Transmission Set to Pay $0.25 Dividend, Yielding 1.3%

Allison Transmission Set to Pay $0.25 Dividend, Yielding 1.3%

Allison Transmission Holdings Inc. (NYSE:ALSN) is scheduled to trade ex-dividend on May 17, 2024, with a dividend payment of $0.25 per share to be distributed on May 31, 2024. The dividend represents a trailing yield of approximately 1.3% based on the company's current stock price of $76.52.

Why this matters: The dividend payment and yield of Allison Transmission Holdings Inc. can have a significant impact on investors' portfolios, particularly those seeking stable income streams. As the company'sdividend growth and sustainability are closely watched, this news can influence market sentiment and investment decisions in the automotive and industrial sectors.

Over the last 12 months, Allison Transmission Holdings paid out a total of $1.00 per share in dividends, amounting to only 12% of its profit. The company's dividend appears well-covered by both profit and cash flow, with just 13% of its cash flow paid out as dividends last year, suggesting a conservative payout ratio.

Allison Transmission Holdings has delivered steady earnings growth, with a 9.8% per annum increase in its EPS over the past five years. Management is reinvesting nearly all of the profits back into the business, which could bode well for future earnings and dividend growth. The company has also consistently raised its dividend, delivering an average annual increase of 7.6% over the past decade.

Institutional investors have taken notice of Allison Transmission's strong performance and dividend track record. Access Investment Management LLC recently purchased a new stake of 10,880 shares valued at approximately $633,000 in the fourth quarter. Other firms, including Federated Hermes Inc., Invesco Ltd, Lazard Asset Management LLC, and ClariVest Asset Management LLC, have also bought and sold shares of the company in recent transactions.

Analysts remain bullish on Allison Transmission's prospects, with many raising their price targets on the stock. Oppenheimer lifted their target price from $67.00 to $90.00 and issued an "outperform rating" on the shares. The Goldman Sachs Group raised their target from $55.00 to $63.00 despite giving the stock a "sell rating," while Robert W. Baird upped their price objective from $84.00 to $87.00 with a "neutral rating."

Allison Transmission reported strong quarterly results, with earnings of $1.90 per share beating the consensus estimate by a penny. Revenue came in at $789 million, surpassing expectations of $772.37 million. The company posted a healthy return on equity of 55.83% and a net profit margin of 21.80% for the quarter.

Insiders at Allison Transmission have been cashing in on the stock's strength. CEO David S. Graziosi sold 76,318 shares at an average price of $70.57 in a transaction on February 20th, netting over $5.38 million. VP Ryan A. Milburn also sold 2,598 shares on March 4th at $75.40 per share, for a total value of nearly $196,000.

With its consistent dividend growth, strong earnings, and vote of confidence from analysts and investors, Allison Transmission Holdings shapes up as an attractive income stock. The company's conservative payout ratio and management's reinvestment of profits suggest the dividend is sustainable with room to grow. However, potential investors should still weigh the risks carefully before shifting their portfolios into gear with Allison Transmission.

Key Takeaways

  • Allison Transmission to trade ex-dividend on May 17, 2024, with a $0.25 per share dividend.
  • The dividend represents a 1.3% trailing yield based on the current stock price of $76.52.
  • The company's dividend appears well-covered by profit and cash flow, with a conservative payout ratio.
  • Allison Transmission has delivered steady earnings growth, with a 9.8% per annum increase in EPS over the past five years.
  • Analysts remain bullish, with many raising their price targets, and institutional investors have taken notice of the company's strong performance.