Raised every year, covered five times over by free cash flow, and levered inside the pass band. CDW pays $0.63 a quarter, $2.52 annualized, with the cash-paid dividend rising every year in the record shown, from $0.31 in 2017 to $2.39 in 2025. Dividends of $322 million are 22% of 2025 free cash flow of $1,451 million, a pass, and net debt is 2.7x EBITDA, a pass. No caution applies on any check, so the card grades good.
Key risk: IT spending is cyclical and the business carries acquisition debt; a corporate spending freeze cuts the reseller margin that funds the payout.
Changes if: Free-cash-flow payout crosses 60%, leverage passes 3x, or the raise streak breaks.
- ✓Cash-flow cover 22.2% of FY2025 free cash flow, pass (<60%).
- ✓Leverage 2.7x net debt/EBITDA, pass (<3x).
- ✓Dividend history Cash-paid dividend rose every year, 2015-2025; no cut in 10 years.
- ✓Trap screen Yield 1.56%, 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.