Eleven straight years of raises, covered three times over, and levered inside the pass band. Allegion pays $0.55 a quarter, $2.20 annualized, with increases for 11 to 12 consecutive years and cash-paid dividends rising every year in the record shown, from $0.84 in 2020 to $1.80 in 2025. Dividends of $159 million are 31% of 2025 free cash flow of $517 million, a pass, and net debt is 1.9x EBITDA, a pass. No caution applies on any check, so the card grades good.
Key risk: Allegion is a leveraged roll-up of access and lock brands; a construction downturn cuts the non-residential demand behind the earnings, and the 2023 debt-funded deal still sits on the balance sheet.
Changes if: Free-cash-flow payout crosses 60%, leverage passes 3x, or the raise streak breaks.
- ✓Cash-flow cover 30.8% of FY2025 free cash flow, pass (<60%).
- ✓Leverage 1.9x net debt/EBITDA, pass (<3x).
- ✓Dividend history Raised 11-12 consecutive years; no cut.
- ✓Trap screen Yield 1.20%, payout under 100%, no cut; not a trap pattern.
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.