Last Updated on June 5, 2020 by Dividend Power

Genuine Parts Company (GPC) is now yielding over 5%. Historically, when Genuine Parts is yielding over 5% it has occurred during a bear market. In fact, looking back, the yield has only gone over 5% during three periods: the dot.com crash, the Great Recession, and the cornavirus crisis. Genuine Parts has a lot of characteristics that most dividend growth investors and income investors should like. The company is a long time Dividend King having paid a growing dividend for 64 consecutive years. This is the second longest streak of publicly traded companies in the U.S. The dividend is reasonably well covered by earnings in normal times, and the company is growing both organically and through acquisitions. Granted, 2020 will be a tough year and margins have been declining due to changing mix resulting in products sold, competition, and geographic expansion. In addition, the balance sheet concerns me, and free cash flow coverage of the dividend does not meet my criterion even without considering the impact of covid-19. Hence, I am currently neutral on Genuine Parts Company.

Overview of Genuine Parts Company

Genuine Parts Company is a distributor and retailer of automotive parts, industrial and electrical components, and business products. The company is primarily known to most small investors through its ~6,000+ NAPA Auto Parts stores in North America, the GRUPAUTO stores in Europe, and the Repco brand in Australia for a total of over 9,400 stores. The Automotive Parts Group sells replacement parts, heavy duty parts, tools and equipment, accessories, and farm and marine supplies. The Industrial Parts Group offers access to 7.1 million industrial parts and serves over 200,000 MRO and OEM customers. The Electrical Specialties Group distributes over 110,000 items. The Business Products Group distributes over 69,000 items. Roughly 56% of sales are from automotive parts, 34% from industrial components, and 10% from business products. Companywide sales were $19.4 billion in 2019.

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