Covered, delevered, and raised every year. Cummins paid $1,055 million of dividends against $2,386 million of free cash flow in fiscal 2025, net debt is under one times EBITDA, and the quarterly rate has risen every year since 2018. The $2.20 dividend declared in October 2026 clears the 1% yield line, and every check passes, so the card is graded good.
Key risk: Truck and engine cycles plus emissions-transition spending can compress free cash flow in a downturn year, as 2024 showed.
Changes if: Free cash flow payout rises above 60%, or the $2.20 rate is cut.
- ✓Cash-flow cover 44.2% of FY2025 free cash flow, pass (<60%).
- ✓Leverage About 0.8x on reconstructed EBITDA, pass (<3x).
- ✓Dividend history Quarterly rate $1.14 in 2018 to $2.00 in 2025, raised every year; $2.20 declared Oct 2026. No cut in the series shown.
- ✓Trap screen Yield 1.66%, no cut, payout under 60%; 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.