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A.O. Smith (AOS) Dividend Stock Analysis

by | Dividend Aristocrats, Dividend Champions

A.O. Smith Logo

A.O. Smith Dividend

The A.O. Smith (AOS) dividend has been paid continuously since 1983 and increased for 31 consecutive years; qualifying the company as a Dividend Aristocrat and Dividend Champion.

Current Annualized Dividend: $1.28

A.O. Smith (AOS) Intrinsic Value – Margin of Safety Analysis            

(updated June 2024)

Normalized Diluted Earnings Per Share (TTM): $3.85
Free Cash Flow Per Share (TTM): $3.82
Cash Flow From Operations (CFO) Per Share (TTM): $4.38

Estimated Intrinsic Value:  $63

Target Buy Price Based on Required Margin of Safety =  $63
(Required Margin of Safety Based On Risk Stability Grade:

A = 0%, B = 20%, C = 40%, D = 60%, F = 80%)

Target SELL Price Based on Estimated Intrinsic Value = $88
(Allow Overvaluation Adjusted by Risk Stability Grade:

A = 35%, B = 25%, C = 15%, D = 5%, F = 0%)


Risk / Stability Grade: A

A grade indicates a quality company with a strong balance sheet, high earnings quality, and a positive business environment. These stocks require the slimmest margin of safety within the stock universe.

B grade indicates a company with a good balance sheet, good earning quality, and a stable business environment. The margin of safety required should be greater than stocks with an A grade but less than the average stock.

C grade indicates a company with a sufficient balance sheet, at least average earnings quality, and a reasonably stable business environment. The margin of safety required is greater than A & B stocks, but less than D & F stocks.

D grade indicates a company in good standing but has issues that could affect its stability and long term risks. D rated stocks should require a large margin of safety when purchased.

F grade indicates a company with significant issues that are currently affecting its stability and long term risks. Require an extremely large margin of safety for F rated stocks when purchased.


Financial Risk Grade: A

A grade indicates an extremely low probability of a dividend cut. This rating is reserved for companies with strong balance sheets and/or excellent dividend histories.

B grade indicates a very low probability for a dividend cut.

C grade indicates a low probability for a dividend cut and/or average safety risk.

D grade indicates there are issues that should be considered concerning future dividend payments.

F grade indicates serious dividend safety risks. Investors should complete comprehensive due diligence before investing.


Business Quality Grade: A

A grade indicates earnings quality is high or far above average.

B grade indicates earnings quality is good and/or above average.

C grade indicates earnings quality is acceptable or average.

D grade indicates earnings quality is poor and requires thoughtful due diligence.

F grade indicates the quality of the earnings is poor or far below average requiring serious due diligence.

Earnings Report: 3/31/24

AAAMP Portfolios Position Disclosures:
Dividend Growth & Income (DGI) – None
Treasure Trove Dividend (TTD) – None
Global Dividend Value (GDV) – None
Global Value (GV) – None
Global Value Aggressive (GVA) – None
Global Conservative Income (GCI) – None 
Global Aggressive Income (GAI) – None

Company Description

Sector: Industrials
Industry: Diversified Industrials

A.O. Smith is all about water! The company proclaims its singular focus is  becoming a global leader in water technology. It’s one of the world’s leading manufacturers of residential and commercial water heaters, boilers, and water treatment products.

A.O. Smith employs over 16,000 men and women with sales and and distribution in over 60 countries around the world. Their mission is apply innovative  technology and energy-efficient solutions to products that meet the changing world’s needs.

In business for over 80 years, through organic growth and acquisitions, AOS has delivered hot water solutions with brands such as American Water Heaters, Aquasana, GSW, Hague Quality Water, John Wood, Lochinvar, Reliance Water Heaters, State Water Heaters, Takagi, U.S. Craftmaster Water Heaters, 

Approximately 2/3 of total annual company revenues ($3.2 billion) come from North America and 1/3 from the rest of the world.

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While Arbor Investment Planner has used reasonable efforts to obtain information from reliable sources, we make no representations or warranties as to the accuracy, reliability, or completeness of third-party information presented herein. The sole purpose of this analysis is information. Nothing presented herein is, or is intended to constitute investment advice. Consult your financial advisor before making investment decisions.