A. O. Smith: A Dividend Aristocrat On Sale


  • I think the recent financial performance has been quite good, in spite of the slight deterioration of the balance sheet. The dividend remains very well covered in my view.
  • In spite of this, the shares are trading near the bottom end of their range, which puts the yield near the top of its historical range.
  • The puts I wrote earlier did better (less badly) than the stock, highlighting yet again the risk-reducing, yield-enhancing potential of short puts.

glowing graph 2

Jonathan Kitchen

I last looked at the shares of A. O. Smith Corporation (NYSE:AOS) in mid-February of this year, and since then the stock has dropped about 24% against a loss of about 12.75% for the S&P 500. Although I bought a

A financial history of A. O. Smith from 2014 to the present.

A. O. Smith Financials (A. O. Smith investor relations)

Data by YCharts

While investors are buying the shares at a relative discount, they’re receiving a dividend yield that’s relatively high, per the following:

Data by YCharts

Disclosure: I/we have a beneficial long position in the shares of AOS either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Additional disclosure: I’m still short the November puts as I’d be happy to buy at $50. I’ll be buying 500 more shares this morning.

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