Dividend Kings In Focus: Tennant Company

Updated on July 10th, 2025 by Felix Martinez

Tennant Company (TNC) has increased its dividend for over 54 years, and as a result, it has joined the list of Dividend Kings.

The Dividend Kings are a group of 55 stocks that have increased their dividends for at least 50 years. We believe the Dividend Kings are among the highest-quality dividend growth stocks to buy and hold for the long term.

With this in mind, we created a full list of all 55 Dividend Kings. You can download the full list, along with important financial metrics such as dividend yields and price-to-earnings ratios, by clicking on the link below:

Click here to instantly download your free spreadsheet of all Dividend Kings now, along with important investing metrics.

Tennant Company is a reliable dividend growth stock that can increase its dividend, even during recessions.

Business Overview

Tennant Company is a machinery company that produces cleaning products and offers cleaning solutions to its customers. In the US, the company holds a market leadership position in its industry, and it also sells its products in more than 100 additional countries worldwide. Tennant was founded in 1870.

Tennant Company reported net sales of $290.0 million in Q1 2025, a 6.8% decrease from $311.0 million in Q1 2024, driven by a 5.0% organic sales decline, primarily due to lower volumes in North America, which lapped a $50 million backlog-reduction benefit from the prior year. Despite the drop, order rates increased 13%, marking four consecutive quarters of robust demand. Tennant reaffirmed its 2025 guidance, projecting net sales of $1,210–$1,250 million, organic sales decline of 1.0%–4.0%, adjusted diluted EPS of $5.70–$6.20, Adjusted EBITDA of $196–$209 million, and an Adjusted EBITDA margin of 16.2%–16.7%, while addressing tariff challenges through supply-chain and pricing strategies.

Financial metrics weakened, with Adjusted EBITDA falling to $41.0 million from $54.9 million and the EBITDA margin dropping to 14.1% from 17.7%, impacted by an unfavorable product mix and inflation. Gross profit margin declined to 41.4%, down 280 basis points, while net income dropped to $13.1 million from $28.4 million, and adjusted diluted EPS fell to $1.12 from $1.81. Selling and Administrative expenses rose to $90.7 million, driven by ERP modernization costs, though mitigated by lower compensation and discretionary spending.

Tennant returned $25.8 million to shareholders through $5.6 million in dividends and $20.2 million in share repurchases. Operating cash flow was negative at $0.4 million due to ERP investments, resulting in a free cash flow of $(7.4) million. With $79.5 million in cash and $434.3 million in available borrowing capacity, liquidity remained strong. The net leverage ratio of 0.66 times Adjusted EBITDA stayed below the target range, supporting Tennant’s focus on operational efficiency and capital allocation amid economic uncertainties.

Source: Investor Presentation

Growth Prospects

Tennant Company’s earnings per share were quite lumpy over the last decade. Overall, the trend was upward, but there were numerous fluctuations; the company has not been able to grow its earnings consistently.

Between 2014 and 2024, Tennant Company recorded an average annual earnings-per-share growth rate of 97.5%.

However, Tennant Company’s earnings per share saw some ups and downs during that time frame, such as in 2017, when profits were down considerably compared to the previous year.

The company expects 2024 to also be a weak year compared to 2023.

Source: Investor Presentation

Tennant has plans to grow its sales organically, especially in the Asia/Pacific region, where it benefits from above-average market growth rates.

The takeover of the Chinese cleaning equipment company Gaomei improved Tennant’s sales outlook in the Chinese and other Asian markets over the next couple of years.

Synergies from this acquisition and other moves to bolster overall profitability and the business in Asia will increasingly pay off, delivering attractive earnings growth for Tennant.

We expect Tennant to achieve 7% annual earnings-per-share growth over the next five years.

Competitive Advantages & Recession Performance

Tennant Company is the leader in the US cleaning machines market. This position provides a competitive advantage, as it enables better economies of scale and a superior sales network compared to its peers.

During the last financial crisis, Tennant remained profitable, but its earnings still suffered considerably. Tennant’s earnings-per-share throughout the Great Recession of 2007-2009 are listed below:

2007 earnings-per-share of $1.79
2008 earnings-per-share of $1.35 (24.6% decline)
2009 earnings-per-share of $0.65 (51.8% decline)
2010 earnings-per-share of $1.31 (101.5% increase)

As you can see, Tennant’s earnings per share declined significantly in 2008 and 2009, indicating that the company is vulnerable to economic downturns. However, the company more than doubled its earnings per share in 2010, showing that it can rebound quickly from recessions.

The company reported earnings-per-share growth in 2020 and 2021, despite the coronavirus pandemic sending the U.S. economy into a recession.

Valuation & Expected Returns

Tennant is expected to generate earnings per share of $5.95 for 2025. Based on this, the stock trades for a price-to-earnings ratio of 14.1. Our fair value estimate is a price-to-earnings ratio of 17. Thus, the stock appears significantly undervalued. An expanding price-to-earnings ratio could result in annual returns increasing by 3.0% per year over the next five years.

Future returns will also include earnings-per-share growth and dividends. We expect Tennant to grow earnings per share each year by 7.0%, primarily through organic revenue growth and acquisitions.

Additionally, the shares offer a 1.4% current dividend yield. The combination of valuation changes, earnings growth, and dividends results in total expected returns of 11.4% per year over the next five years. We rate the stock a buy.

Tennant Company has been valued at high multiples throughout the last decade. This is somewhat surprising, as its growth has been solid but not outstanding. Still, based on our earnings-per-share estimate, shares are trading below what we deem a fair valuation for the company.

Tennant has a secure dividend, with a projected dividend payout ratio of approximately 20% for 2025. This provides the company sufficient room to continue increasing the dividend at a rate in line with its adjusted EPS growth rate.

Final Thoughts

Tennant Company is the leader in its niche market. Organic growth and acquisitions are expected to drive a solid growth rate over the next several years. Shareholders should also see continued dividend increases each year.

Following a strong year in 2023, Tennant is likely to see its profits remain flat or decline in 2025. Tennant shares have high expected total returns, which is why we rate the stock a buy.

Additional Reading

The following databases of stocks contain stocks with very long dividend or corporate histories, ripe for selection for dividend growth investors.

- The Dividend Aristocrats List: S&P 500 stocks with 25+ years of dividend increases.
- The High Yield Dividend Aristocrats List is comprised of the 20 Dividend Aristocrats with the highest current yields.
- The Dividend Achievers List is comprised of ~350 stocks with 10+ years of consecutive dividend increases.
- The High Yield Dividend Kings List is comprised of the 20 Dividend Kings with the highest current yields.
- The Blue Chip Stocks List: stocks that qualify as Dividend Achievers, Dividend Aristocrats, and/or Dividend Kings
- The High Dividend Stocks List: stocks that appeal to investors interested in the highest yields of 5% or more.
- The Monthly Dividend Stocks List: stocks that pay dividends every month, for 12 dividend payments per year.
- The Dividend Champions List: stocks that have increased their dividends for 25+ consecutive years.
  Note: Not all Dividend Champions are Dividend Aristocrats because Dividend Aristocrats have additional requirements like being in The S&P 500.
- The Dividend Contenders List: 10-24 consecutive years of dividend increases.
- The Dividend Challengers List: 5-9 consecutive years of dividend increases.
- The Best DRIP Stocks: The top 15 Dividend Aristocrats with no-fee dividend reinvestment plans.
- The High ROIC Stocks List: The top 10 stocks with high returns on invested capital.
- The High Beta Stocks List: The 100 stocks in the S&P 500 Index with the highest beta.
- The Low Beta Stocks List: The 100 stocks in the S&P 500 Index with the lowest beta.
- The Complete List of Russell 2000 Stocks
- The Complete List of NASDAQ-100 Stocks

Thanks for reading this article. Please send any feedback, corrections, or questions to support@suredividend.com.

Sure Dividend

High-Quality Dividend Stocks, Long-Term Plan