Dividend Kings In Focus: H.B. Fuller

Up to date on July eighth, 2025 by Felix Martinez

H.B. Fuller (FUL) has elevated its dividend for 56 consecutive years. That places the corporate among the many elite Dividend Kings, a small group of shares which have elevated their payouts for no less than 50 consecutive years.

You possibly can see the whole record of all 55 Dividend Kings right here.

Now we have compiled a complete record of all Dividend Kings, together with key monetary metrics reminiscent of price-to-earnings ratios and dividend yields. You possibly can entry the spreadsheet by clicking on the hyperlink under:

H.B. Fuller has remained a comparatively small firm, buying and selling at a market capitalization of simply $3.3 billion. Nonetheless, a small market cap isn’t a unfavorable characteristic when investing; fairly the opposite.

Regardless of its small dimension, H.B. Fuller has promising progress prospects due to the expansion potential of the area of interest market through which it operates. The inventory provides a 1.6% dividend yield, which is greater than the yield of the S&P 500.

Nonetheless, there’s ample room for future dividend raises, due to the corporate’s low payout ratio and robust progress prospects.

Enterprise Overview

H.B. Fuller is a world market chief in adhesives, sealants, and different specialty chemical merchandise. It has 69 manufacturing services and 38 expertise facilities and sells its merchandise in 125 international locations.

Adhesives are a fascinating area of interest market. Adhesives are vital supplies in quite a few purposes, however they comprise only a small expense for H.B. Fuller’s prospects. Adhesives make up lower than 1% of the price of items for many prospects.

As well as, every adhesive has distinctive chemistry, with most product formulations together with 3-10 chemical compounds. Additionally it is uneconomical for patrons to modify to a different provider.

Total, H.B. Fuller’s prospects should use its important merchandise with out paying a lot consideration to their value, which is minor in comparison with different prices.

H.B. Fuller reported Q2 2025 web earnings of $41.8 million ($0.76 per diluted share), down 18.4% from $51.3 million ($0.91 per diluted share) in Q2 2024. Adjusted EPS rose 5% to $1.18, pushed by greater adjusted web earnings and fewer shares. Web income fell 2.1% to $898.1 million, however natural income grew 0.4%, with pricing up 0.7%, offset by decrease quantity, a 1.2% foreign money headwind, and a 1.3% affect from divestitures. Adjusted EBITDA elevated 5% to $166 million, with a margin of 18.4% (up 130 foundation factors), reflecting value financial savings and pricing actions.

Gross revenue was $286.4 million, with an adjusted gross margin of 32.2% (up 110 foundation factors). Adjusted SG&A bills had been flat at $176 million. Working money stream rose 35.4% to $111 million. Web debt was $2.016 billion, down $59 million, with a web debt-to-adjusted EBITDA ratio of three.4X. The corporate repurchased 1 million shares year-to-date.

H.B. Fuller raised its 2025 steerage, anticipating web income down 2–3%, natural income flat to up 2%, adjusted EBITDA of $615–$630 million (4–6% progress), and adjusted EPS of $4.10–$4.30 (7–12% progress). CEO Celeste Mastin emphasised the significance of sturdy execution and portfolio optimization, positioning the corporate to outperform in a difficult world market.

Supply: Investor Presentation

Development Prospects

Due to the excessive fragmentation of this market, there’s a vital progress potential for H.B. Fuller, which has constantly been the second-largest participant available in the market behind Henkel.

Furthermore, H.B. Fuller enjoys economies of scale that its smaller rivals can’t match, whereas the latter additionally lack the worldwide attain to compete straight with H.B. Fuller. Consequently, H.B. Fuller is more likely to continue to grow by gaining market share from its small rivals over time.

Supply: Investor Presentation

H.B. Fuller can also be more likely to continue to grow through vital acquisitions. In 2017, it acquired Royal Adhesives & Sealants for $1.6 billion. As the worth of that acquisition is about 38% of the present market capitalization of H.B. Fuller, it’s evident that the merger, the most important within the firm’s historical past, was vital.

The acquisition enhanced H.B. Fuller’s product vary to incorporate extra specialised adhesives and boosted its annual gross sales by roughly $735 million (32%).

Because the acquisition, H.B. Fuller has been decreasing its debt load at a quick tempo. When that course of is full, H.B. Fuller will shift its focus once more to potential takeover targets. The corporate additionally acquired Adecol in late 2017 to be able to improve its progress potential in Brazil.

H.B. Fuller has grown its earnings per share at a median annual fee of seven.5% over the previous seven years and 10.6% over the previous 5 years. The corporate has emerged stronger from the pandemic and has offered steerage for an enchancment in its adjusted EBITDA.

Total, we count on H.B. Fuller to develop its earnings per share at a 6.0% common annual fee over the following 5 years, roughly in keeping with its historic progress tempo.

Aggressive Benefits & Recession Efficiency

H.B. Fuller’s prospects manufacture a variety of merchandise. Consequently, the efficiency of H.B. Fuller drastically is determined by the prevailing financial situations, and thus, the corporate is weak to recessions. Through the Nice Recession, its earnings per share plummeted 79%, from $1.68 in 2007 to $0.36 in 2008, and the inventory misplaced two-thirds of its market capitalization in beneath six months.

Nonetheless, the big selection of purposes of its adhesives supplies some diversification. For instance, throughout the pandemic, sturdy progress in demand for well being and hygiene merchandise largely offset the lower in demand for adhesives in different classes. Consequently, earnings per share dipped solely 3% in 2020, an admirable efficiency for an industrial firm.

Furthermore, H.B. Fuller is the #1 or #2 participant in most of its markets, and thus, it could possibly endure a downturn extra readily than its small rivals, due to its economies of scale. Additionally it is value noting that its high 10 prospects account for a comparatively small portion of its income, and thus, the corporate has restricted threat from any particular buyer.

Lastly, it’s spectacular that an industrial producer intently tied to the underlying financial progress has raised its dividend for 56 consecutive years.

It is a testomony to this area of interest market’s sturdy progress and the corporate’s wonderful enterprise execution. H.B. Fuller has achieved this distinctive dividend progress report partly due to its low payout ratio.

The corporate has constantly focused a payout ratio of round 25% and has subsequently been in a position to preserve its dividend progress even in years when its earnings have briefly declined. Because of the low payout ratio, the dividend is protected, however the resultant 1.6% dividend yield is lackluster.

Valuation & Anticipated Returns

H.B. Fuller is at the moment buying and selling at 15.2 instances its anticipated earnings per share of $4.15 this yr. Whereas the historic earnings a number of of the inventory is eighteen.5, we consider a good price-to-earnings ratio is 15.0, contemplating the inventory’s cyclical nature. If the inventory reaches our truthful valuation degree over the following 5 years, it can endure a 0.1% annualized headwind in its returns.

Given 6% anticipated earnings-per-share progress, the 1.6% dividend, and a -0.1% affect of a contracting price-to-earnings a number of, we count on H.B. Fuller to supply a 7.5% common annual whole return over the following 5 years. This fee of return renders the inventory a “Maintain” at its present inventory worth of $62.

Last Ideas

H.B. Fuller is very weak to recessions, but it surely proved markedly resilient throughout the pandemic, due to a considerable improve within the demand for adhesives utilized in well being and hygiene merchandise.

Furthermore, due to the dependable long-term progress of its area of interest market and its excessive fragmentation, H.B. Fuller is more likely to develop its earnings per share at a mid-single-digit fee within the upcoming years.

Nonetheless, the corporate additionally seems to be considerably overvalued, whereas the 1.6% dividend yield is comparatively low. Consequently, we advise buyers to attend for a significant correction in H.B. Fuller’s inventory worth earlier than buying it.