Comparing Pollution Control Dividend Payout Ratios

 |  Includes: DCI, NLC, PLL, PNR, SMSMY
by: Zvi Bar
Further to my recent article discussing garbage management companies, here is another closely related group of companies operating in the recycling, remediation and pollution control business.
Beyond the resources harvestable from garbage, pollution causes noticeable problems. Pollution control companies produce products such as the filters used everywhere, masks worn by those sorting garbage and the chemical dispersants like those used on oil in the Gulf of Mexico. These businesses are also growing with the increase in global polulation and garbage production.
Market Value
Payout Ratio
Donaldson Company, Inc.
$4.2 B
Nalco Holding Co.
$3.7 B
Pall Corp
$6.1 B
Pentair, Inc.
$3.64 B
Sims Metal Management Ltd.
$3.57 B
Click to enlarge
A higher dividend payout ratio leaves a lower percentage of total income within the company. This means that while the owners are receiving income, the company’s ability to grow may be hampered by a lack of income to reinvest. Moreover, where the payout is too high, it may indicate that the dividend is too high and in danger of being reduced or not increased.
Lower dividend payout ratios are often found in companies that prefer to reinvest their income into the business. This reinvestment is sensibly performed order to produce growth and hopefully eventually increase their income. That increased income could then cause the company to appreciate in value and / or increase its dividends.
Nalco’s noticeably lower dividend and payout ratio goes hand in hand with this. That difference may indicate production cost issues for the synthetic chemical manufacturer, rapid growth, or some other need for the income. Otherwise, these companies all tend to pay out at relatively close rates.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.