Pentair Just Hit a Milestone Barely 1 in 1,000 Stocks Achieve: Is It a Buy?

Oil tycoon J.D. Rockefeller, who became the first billionaire in 1916, once said that the one thing that gave him pleasure was to see his dividends come in. While we can debate how well-rounded that made him as a person, it's only natural that a powerful income stream, growing each year "as certain as birthdays" in legendary investor Warren Buffett's words, can bring investors both joy and financial stability.

For instance, ExxonMobil, which resulted from a Supreme Court-mandated breakup of Rockefeller's empire, has now raised its dividend for 43 consecutive years. Its long-term investors know exactly what Rockefeller meant.

But a handful of companies are ahead of this multi-generation streak of rising payouts. Called Dividend Kings, they have raised dividends annually for 50 years or more. It's a rare company that can deliver this dividend growth amid all of the economic headwinds and uncertainties since 1976, so the Dividend Kings form a small club. As of last month, just 56 companies made the cut, out of 54,000 publicly traded companies in the world.

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The newest Dividend King

In mid-December, the water solutions company Pentair (NYSE: PNR) announced an 8% dividend increase, marking its 50th annual dividend hike. The move elevates the company to Dividend King status, and investors have until Jan. 23 to buy shares and secure its next quarterly payout before the stock goes ex-dividend.

While this 1-in-1,000 achievement is notable, it doesn't guarantee that a stock will succeed in the years ahead. Even Dividend Kings can crash and burn, as Leggett & Platt showed in 2024 when the 141-year-old bedding, flooring, and furniture company announced a painful 89% dividend cut, ending a 52-year streak of rising payouts. Shares have fallen around 33% in the years since.

So, can Pentair avoid that fate and go the route of a Dividend King like Coca-Cola, which after its 50th dividend increase has raised payouts for another 13 straight years and counting? Here's what the numbers say.

Pentair's future dividend prospects: A look under the hood

Pentair's business comprises three segments. Pentair Flow provides water removal services to commercial properties and communities, while offering water pump solutions for flood water disposal and fire control. Pentair Pool provides pool maintenance services, and Pentair Water offers home water filtration, food service water filtration, and ice equipment for national food service operators.

In other words, this is the kind of "boring" business that nonetheless can offer stability and potentially market-beating returns. Sure enough, Pentair's dividend has grown by 1,300% since the year 2000, while shares have returned 710%.

Last quarter, Pentair reported adjusted earnings-per-share growth of 14%. That more than supports its recent 8% dividend hike. The company also reported record year-to-date cash flow of $719 million.

Making the dividend even safer is Pentair's robust share repurchase program. Pentair bought back $175 million shares in the first three quarters of 2025. In its Q4 2025 earnings report, we'll see if the share repurchases continue, but the $175 million in buybacks so far help to shore up the dividend by reducing the shares outstanding, therefore allowing management to mail bigger checks on fewer shares.

Finally, Pentair's payout ratio, or the percentage of net income used to cover its dividend, is stellar. Just 25% of earnings are used to pay its dividend, meaning that management could double the dividend overnight and still have half of Pentair's net income left over for share repurchases, acquisitions, or other investments.

If there's a caveat, it's that Pentair's dividend yield of 1.05% is slightly below that of the average S&P 500 company yield of 1.14%. However, Pentair's 2025 dividend hike of 8% significantly outpaced the S&P 500 average hike of 5.5%.

Since 2021, Pentair has ramped up its dividend by 35%, outpacing the 19% inflation seen in that window. Its fundamentals and shareholder-friendly management should allow it to mail increasingly more powerful checks to shareholders for years to come. This Dividend King won't lose its crown anytime soon.

William Dahl has positions in Coca-Cola. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.