Zurn Elkay Raises Dividend 18.2% to $0.13, Extends 5-Year Streak

Zurn Elkay Water Solutions raised its quarterly dividend 18.2% to $0.13 a share from $0.11. The stock goes ex-dividend November 20, 2026, and payment is due December 7, 2026. The new annual dividend is $0.52 a share.

Why the dividend changed

Management linked the increase to confidence in the water-management company's long-term fundamentals and the operating model behind its sales, margins and cash generation. Chairman and Chief Executive Todd Adams said the decision reflected confidence in the business and its Zurn Elkay Business System, the company's framework for productivity and capital deployment. This was a regular quarterly increase, not a stock-split adjustment, special dividend or merger-related reset. Zurn Elkay's third-quarter results included the increase and management's explanation.

The operating backdrop supports that rationale. Third-quarter net sales rose 9% to $495.1 million, including 7% core growth and 2% from acquisitions. Adjusted EBITDA increased to $140.1 million, or 28.3% of sales, and free cash flow was $110 million after excluding tariff refunds and related taxes. Management attributed the operating-margin improvement to product mix, productivity initiatives and supply-chain repositioning.

Zurn Elkay also used cash for other capital priorities. It spent $35 million on share repurchases during the quarter and funded the acquisition of Intellihot, a maker of high-efficiency commercial water-heating systems. The acquisition expands Zurn Elkay's position in the hot-water loop, while internally developed digital mixing-valve products extend the company into another adjacent category. The dividend increase therefore followed a quarter in which cash generation supported acquisitions, repurchases and a higher recurring payout rather than one isolated transaction.

Dividend track record

The increase extends Zurn Elkay's dividend-growth streak to 5 consecutive years. Its 5-year record amounts to 18.5% annual growth, although the pace has varied materially from year to year.

Full-year payments rose from $0.15 in 2020 to $0.16 in 2021, an increase of 3.9%. The annual total then climbed to $0.20 in 2022, up 24.9%, and $0.29 in 2023, up 45.0%. Growth moderated but remained substantial as the total reached $0.33 in 2024, up 13.8%, and $0.38 in 2025, up 15.2%. The pattern shows a small initial increase followed by a series of larger steps as the company developed its water-focused portfolio.

The quarterly record shows the same stair-step approach. Zurn Elkay paid $0.09 for the four quarters through August 20, 2025, then $0.11 for the next four quarters through August 20, 2026. The new $0.13 rate marks the next step rather than a temporary extra distribution.

Is the dividend covered?

The dividend consumes 26% of earnings. That leaves most reported earnings available for acquisitions, repurchases, debt service and reinvestment while providing a buffer against ordinary fluctuations in profit.

SmarterDividends rates the dividend A with a safety score of 80. That grade means very safe, corresponding to a score of 80-100. The relatively low earnings payout ratio, recurring quarterly pattern and management's reported cash generation underpin the rating, although the dividend remains subject to future board approval and business conditions.

Yield and valuation

At a share price of $49.15, the forward yield is 1.05%. That is below the Industrials sector median forward yield of 1.63%, so the new payout still offers less current income than the sector benchmark despite the 18.2% increase. At the annual rate, 100 shares produce $52.00 of dividend income.

SmarterDividends' fair-value estimate is $41.08. The valuation verdict is overvalued, with 15% downside to that estimate. The shares have recorded a 1.8% gain over the past year, while the company has a market value of $8.2 billion.

What to watch

The immediate dates are November 20, 2026, when the shares trade ex-dividend, and December 7, 2026, when the payment is scheduled. After that, attention turns to execution against the company's fourth-quarter outlook and the next quarterly dividend declaration.

Management forecast fourth-quarter sales of $430 million to $437 million and adjusted EBITDA of $120 million to $123 million. It also maintained full-year free-cash-flow guidance above $350 million, excluding the net effect of tariff refunds. Those figures will provide the next operating check on the cash-generation argument management used to support the higher dividend.

Investors will also have the Intellihot integration and new hot-water products to monitor. Management has said it is pursuing adjacent markets while remaining cautious about uncertainty in its served markets and the broader economy. The next earnings release will show how those initiatives, productivity measures and capital returns are progressing alongside the new quarterly payout.