Covered and lightly levered, after three flat years and one loss year. AGCO held its regular dividend at $0.29 a quarter from 2023 through early 2026, then raised it a cent to $0.30 in April 2026 — flat 3+ years is a caution under §3, and there was no cut in the regular rate. FY2025 dividends were 11.7% of free cash flow and net debt was 1.8x EBITDA, both passes. FY2024 was a loss year (net loss $424.8 million, operating loss $122.1 million), which is why a single good coverage year does not earn a good tag.
Key risk: Farm-equipment demand is deeply cyclical, and FY2024 already produced a net loss, so coverage can swing from comfortable to thin in one downcycle year.
Changes if: The $0.30 rate is raised again, or free-cash-flow payout crosses 60% in a down year.
- ✓Cash-flow cover 11.7% of FY2025 free cash flow, pass (<60%). FY2024 operating cash flow is not the grading year; FY2025 is the latest 10-K year.
- ✓Leverage Net debt/EBITDA 1.8x, pass (<3x). Debt-to-capitalization 35.8% at Dec 31, 2025 per the 10-K.
- !Growth record Regular rate flat at $0.29/qtr Feb 2023–Feb 2026 (3 years, flat 3+ yrs = caution), raised to $0.30 in Apr 2026; regular rate rose $0.20 → $0.24 → $0.29 over the decade with no regular cut. Specials excluded.
- ✓Trap screen Yield 1.14%, no cut in the regular rate, payout under 100%; not a trap pattern. The 2024 loss year is disclosed in the verdict, not hidden.
What this grade doesn't say: It screens the dividend only — covered, real, compounding. It says nothing about valuation or price: a well-covered payer can still be overpriced, and its price can still fall.