Genuine Parts (GPC) Dividend Safety: Is This Auto Parts Giant’s Payout Secure?

Core Viewpoint - Genuine Parts Company (GPC) has a long history of paying dividends, but its financial performance in 2025 has raised concerns about its sustainability, particularly as it now pays out nearly all of its net income in dividends [2][3]. Financial Performance - GPC's earnings payout ratio is at 70.4%, with earnings of $5.81 per share and dividends of $4.09, indicating a concerning trend as net income fell by 31.3% year-over-year to $904 million while dividends continued to rise [3][8]. - The free cash flow (FCF) payout ratio is approximately 60%, which is considered adequate, but the remaining free cash flow after capital expenditures is only $129 million, a significant decrease from $396 million the previous year [4]. Balance Sheet Condition - Total debt has increased by 31% over two years to $6.4 billion, while cash reserves have decreased by 61% to $431 million, leading to a higher debt-to-equity ratio of 1.34x [5][6]. - Interest coverage remains strong at 8.2x, and net debt-to-EBITDA is manageable at 3.1x, but short-term debt has tripled in two years, indicating potential liquidity issues [6]. Dividend History and Growth - GPC has consistently raised its dividend since 1957, making it a Dividend King, but the latest increase of 3% to $1.03 is the slowest growth rate in recent history [7].