Core Insights - Lowe's has a target payout ratio of 35% and currently operates at approximately 38%, indicating potential for dividend growth aligned with net income increases [1][2] - The company has significantly outpaced inflation with its dividend growth, having more than quintupled the inflation rate since the pandemic [2] - Lowe's has maintained a streak of over 60 consecutive years of dividend increases, earning it the status of both Dividend Aristocrat and Dividend King [3][4] Dividend Growth and Strategy - Lowe's dividend growth has doubled since 2021, with a 4% increase planned for 2025, which still exceeds inflation [2][3] - The company has made strategic acquisitions, spending over $10 billion on Artisan Design Group and Foundation Building Materials to enhance its market position and product offerings [6] - Analysts project an 8% growth for Lowe's in the coming year, although they have historically underestimated the company's earnings growth [6] Market Position and Comparisons - Lowe's is part of a select group of companies known as Dividend Aristocrats, with fewer than 70 companies achieving this status [4][5] - The article highlights other companies with strong dividend growth, such as A. O. Smith and Automatic Data Processing, which also have impressive long-term dividend increase records [5][13] - A. O. Smith has increased its dividends by 1,600% since 2000, while Automatic Data Processing has raised its payouts by 2,100% in the same period [8][13] Financial Metrics - Lowe's current market capitalization is approximately $136 billion [3] - A. O. Smith has a payout ratio of 37%, lower than Lowe's, indicating potential for future dividend growth [8] - Automatic Data Processing has a higher payout ratio of 60%, but it has maintained a strong earnings growth rate of 9.8% [14]

Core Viewpoint - A. O. Smith Corporation (AOS) is expected to report second-quarter 2025 results on July 24, with mixed performance indicators suggesting potential challenges and opportunities ahead [1][9]. Revenue and Earnings Estimates - The Zacks Consensus Estimate for A. O. Smith's revenues is $987.3 million, reflecting a 3.6% decline from the previous year [2]. - The consensus estimate for adjusted earnings is 97 cents per share, indicating an 8.4% decline year-over-year [2]. Segment Performance - The North-American segment is anticipated to benefit from strong demand for commercial boilers and water treatment products, although a decline of 3.4% year-over-year to $764 million is expected due to softness in the residential and commercial water heater industry [3]. - The Rest of World segment is projected to generate revenues of $234 million, down 4.5% from the prior year, primarily due to challenges in the Chinese real estate market affecting residential water treatment and gas water heating products [4]. Cost and Acquisition Impact - A. O. Smith has faced high costs and expenses, with labor shortages and increased material costs negatively impacting performance, despite some moderation in supply-chain constraints [5]. - Recent acquisitions, such as the Pureit business from Unilever and Impact Water Products, are expected to positively influence the company's top line and enhance its position in the water treatment industry [6][7]. Earnings Expectations - A. O. Smith has an Earnings ESP of +4.48%, with the Most Accurate Estimate at $1.01 per share, suggesting a potential earnings beat despite the projected decline in EPS [8][9].