Covered on cash flow, thin on 2025 earnings. A 3.45% yield at $1.0625 a quarter, raised 3.1% from $1.03 in February 2026, is covered by operating cash flow but not by depressed 2025 GAAP earnings: 2025 free cash flow was $420.9 million against $563.8 million of dividends paid, after asbestos-related and other charges crushed reported net income to $65.9 million. The 2026 outlook — $550–$700 million of free cash flow — would cover the roughly $590 million annual dividend, but only just at the low end.
Key risk: Earnings quality — 2025 showed how charges can wipe out reported profit while the dividend keeps rising, and 2026 free-cash-flow guidance leaves little cushion at its low end.
Changes if: 2026 free cash flow lands below the $550 million low end of guidance, or another large charge hits reported earnings while cash flow also weakens.
- !Payout-coverage check: Caution — the GAAP trailing payout is distorted (over 1,000% on depressed 2025 earnings) and 2025 free cash flow of $420.9 million did not cover $563.8 million of dividends paid. Coverage rests on the 2026 free-cash-flow guidance of $550–$700 million, not on 2025 results.
- ✓Yield check: 3.45% indicated — $1.0625/qtr × 4 at the $123.02 close on Oct. 23, 2026. Real, regular quarterly yield.
- ✓Dividend growth check: Quarterly dividend raised in February 2026, from $1.03 to $1.0625 (about 3.1%), continuing a long annual-raise run; the streak length is not stated on the card because it was not verified from company filings.
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.