Our analysis is based on comparing GATX Corp. with the following peers – Willis Lease Finance Corporation, Ryder System, Inc., American Railcar Industries, Inc., Caterpillar Inc., General Electric Company, Trinity Industries, Inc. and Rand Logistics, Inc. (WLFC-US, R-US, ARII-US, CAT-US, GE-US, TRN-US and RLOG-US).
GATX Corp.’s dividend yield is 2.69 percent and its dividend payout is 25.44 percent. This compares to a peer average dividend yield of 2.92 percent and a payout level of 30.07 percent. This relatively lagging dividend performance could spur some dividend action going forward – as long as the company’s relatively strong dividend quality score of 83 out of a possible score of 100 looks sustainable.
Dividend Quality Overview
- Over the last twelve months (prior to December 31, 2016), GATX-US paid a high quality dividend, which represents a yield of 2.65% at the current price.
- Dividend quality trend has not been consistent over the last five years. Dividends were paid during each of these years — of these 2 were high quality, 1 was medium quality and 2 were low quality.
- The ending cash balance, with a dividend coverage of 4.62x, provides a substantial cushion in case of a significant reduction of cash flows in the future.
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Over the last twelve months (prior to December 31, 2016), GATX-US paid a high quality dividend.
The source of the company’s cash to support the dividend paid over the last twelve months is operating cash flow (coverage of 9.33x), investing cash flow (coverage of -6.10x), issuance cash flow (coverage of -0.85x) and twelve-month prior cash (coverage of 3.26x), for a total dividend coverage of 5.62x.
GATX-US‘s issuance cash flow includes outflows from net share buybacks (coverage of -1.78x). Thus, the total coverage including share buybacks is 7.40x, which reflects our assumption that the cash paid for share buybacks is discretionary and could instead be used to pay dividends.
These coverage ratio factors imply that the firm’s dividends are wholly paid from operating and investing cash flows net of any debt repayments, which suggests a high dividend quality.
|Dividend Yield (%)||2.9||2.53||2.44||3.82||2.77||2.69|
|Dividend Payout (%)||41.67||34.54||29.46||32.41||25.44||25.44|
A complete list of metrics and analysis is available on the company page.
GATX Corp. leases, operates, manages, and remarkets long-lived, widely-used assets, primarily in the rail and marine markets. The company operates business through the following segments: Rail North America, Rail International, American Steamship Co. and Portfolio Management. The Rail North America segment is comprised of its wholly-owned operations in the Unites States, Canada, and Mexico. The Rail International segment involves its wholly owned European operations; railcar leasing business in India; and one development stage affiliate in China. The American Steamship Co. segment engages in vessels transports dry bulk commodities on the Great Lakes. The Portfolio Management segment provides leasing, shipping, asset remarketing, and asset management services. The company was founded in 1898 and is headquartered in Chicago, IL.
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