The company that shut down once and later came close to bankruptcy... then raised its annual dividend 70 years in a row

This is a sample issue of The Dividend Record. In a regular issue, only Portfolio subscribers learn the company's name. Here it is up front: Parker Hannifin (NYSE: PH). Figures are as of October 2, 2026.

A truck that went over a cliff... Lindbergh's fuel system... A widow's $1 million bet... 70 straight years of bigger dividends... Why a 0.8% yield hides most of the story...

The company we want to tell you about today shut down once and, years later, came close to bankruptcy.

Most investors couldn't tell you much about it. Its parts sit inside factory machines and aircraft around the world, where almost nobody sees them.

But for 70 straight fiscal years, it has paid its shareholders a bigger annual dividend than the year before. Through the recessions of the 1970s and 1980s... 2008... 2020... every fiscal year, a bigger total.

Today, we'll show you how a brake business that lost its entire inventory down a mountainside became a company with $21.5 billion of sales. We'll show you why its 0.8% yield hides most of the story. And we'll tell you whether it made our list of 25 holdings this quarter.

Let's start at the beginning...

In 1917, a Cleveland engineer bet his new company on a brake...

Arthur Parker had studied electrical engineering at the Case School of Applied Science in Cleveland. In March 1917, he started the Parker Appliance Company on Cleveland's near west side to sell a pneumatic brake system he had designed for trucks and buses.

Then a sales trip went wrong. On an icy Pennsylvania hill, the company's only truck went over a cliff. It was carrying the company's entire inventory.

With nothing left to sell, Parker closed the business. He went to work as an engineer for the Nickel Plate Road, a railroad, and saved his money. In 1924, he opened the doors again.

That was the first close call. It would not be the last.

Three years later, a Cleveland part crossed the Atlantic...

In 1927, Charles Lindbergh flew the Spirit of St. Louis alone and nonstop from New York to Paris. Parker's company built parts for the plane's fuel system.

By then, Parker's fittings had found a home in the young aircraft business, where light and leak free connections mattered. Aviation kept the company going for the next two decades.

Keep that fuel system in mind. We'll come back to it.

Then, in 1945, the founder died... and the orders stopped...

World War II made the company a major supplier of parts for military aircraft. By 1943, it had about 5,000 employees.

Arthur Parker died in 1945, months before the war ended. When the government orders dried up, the company shrank to about 200 employees and came close to bankruptcy.

His widow, Helen, could have sold what was left. Instead, she put his $1 million life insurance policy into the company and hired new management to rebuild it.

The new team wrote down a few rules. The company was not for sale. It would grow through new products and through friendly acquisitions, with Parker as the buyer.

In 1957, it made one of those purchases. It bought the Hannifin Corporation, an Illinois maker of hydraulic and air cylinders, valves and presses, and took the name it carries today.

The dividend record starts in 1957 too. Fiscal 1957 was the first of 70 straight years of higher annual dividends.

Today, that brake business sells $21.5 billion a year...

In fiscal 2026, the year that ended June 30, Parker Hannifin had record sales of $21.5 billion. Organic sales, which leave out acquisitions, divestitures and currency, grew 6.6%.

Adjusted earnings per share rose 18% to a record $32.31. Reported earnings per share were $28.48, up 5%. Cash from operations reached a record $4.4 billion, about 20 cents of every dollar of sales.

And remember that fuel system?

Aerospace is now the company's fastest growing business. The aerospace segment had $7.1 billion of sales last year, about a third of the total. Its organic sales grew 13.4%, about twice the pace of the company as a whole. Its products still include fuel systems, along with avionics, braking systems and hydraulic pumps for commercial and defense aircraft.

Management expects sales to grow another 5.5% to 8.5% in fiscal 2027. That outlook leaves out two big acquisitions we'll get to below.

Here's what the last ten years looked like.

Which brings us to the dividend... and why the yield hides most of the story...

As of October 2, this stock yielded 0.8%.

Plenty of income investors would see a yield under 1% and move on. Look at what the dividend actually did.

Ten years ago, Parker Hannifin paid $0.63 a share every quarter. Today it pays $2.00. That's more than three times as much, a raise of about 12% a year.

So why is the yield so small? Because the share price climbed even faster. Ten years ago, the stock traded at about $125. As of October 2, it was $972.55, about 7.8 times as much.

The dividend is one part of the return. The rest came from a growing business, and from investors paying more for each dollar of its earnings.

And the dividend is well covered. Last year, dividends used about 24 cents of every dollar of free cash flow, the cash left after paying for plants and equipment. The current annual rate of $8.00 is about 28% of last year's earnings per share.

Of course, no business is without risk...

This one has four worth knowing.

First, most of Parker Hannifin's sales are industrial. When factories slow down, orders for hydraulics, filters and fittings slow down with them.

Second, aerospace is now about a third of sales. The business driving today's growth would take the hardest hit from a slump in air travel or a cut in defense spending.

Third, the company is buying big again. In August, it closed its $9.25 billion purchase of Filtration Group, paid for mostly with $7.75 billion of new loans. It has also agreed to buy the aerospace business of CIRCOR for about $2.55 billion. Large deals bring integration risk and more debt.

And fourth, the market already knows this story. At about $973 a share, investors are paying about 34 times last year's earnings. A record year, a strong outlook and a 70 year streak are not secrets. Even a strong business can be a poor investment if the price already assumes everything goes right.

None of these risks erases what this company has proven over 109 years. It lost its inventory over a cliff and started again. It came back from the edge of bankruptcy on a widow's life insurance money. It has paid a bigger annual dividend every fiscal year since 1957. And the business growing fastest today traces back to a fuel system on a plane in 1927.

In every Company Story, Portfolio subscribers also get the company's name, whether it's one of our 25 holdings this quarter, and the numbers behind the story: where a decade of returns actually came from, how well the dividend is covered, what today's price assumes, and how the stock has held up when the market fell apart.

Here is that file for Parker Hannifin.

Below this line is what Portfolio subscribers see in every Company Story.

The company file: Parker Hannifin (NYSE: PH)...

As of October 2, 2026, Parker Hannifin is one of the 25 holdings in The Dividend Record Portfolio.

Now let's open the file. Everything below comes from Parker Hannifin's own results releases and filings, and from ten years of daily share prices through October 2, 2026. These figures describe the company and its shares, and none of them describes the results of The Dividend Record Portfolio.

Where the return actually came from...

Over the past decade, Parker Hannifin's shares did far better than the S&P 500.

$10,000 invested on October 3, 2016, with every dividend reinvested, would have grown to about $91,000 by October 2, 2026. The same $10,000 in the S&P 500 would have grown to about $42,000. That's a return of 24.7% a year, against 15.4% a year for the index. History, not a forecast.

But here's the part most investors never check...

We split the return three ways, from the end of fiscal 2016 to the end of fiscal 2026. Earnings per share rose from $5.89 to $28.48, about 17% a year. Investors also became willing to pay more for each dollar of those earnings: the share price went from about 18 times earnings to about 34 times. And the dividends added the rest.

About two thirds of the return came from the business earning more, about 17.8 points a year. About a quarter came from investors paying a higher price for those earnings, about 7.1 points a year. The dividends added about 1.7 points. Together, that's a total return of about 26.6% a year over those ten fiscal years.

That middle part depends on investors staying willing to pay up, and it can run in reverse. We'll come back to it.

The split stops at the June 30, 2026 close of $978.12. The ten year figure above runs through October 2, 2026.

The dividend has plenty of cover... and room to grow

Last fiscal year, Parker Hannifin paid $936 million in dividends. It generated about $3.9 billion of free cash flow, after spending $459 million on plants and equipment. So the dividend used about 24 cents of every free cash dollar. In fiscal 2016, it used about 32 cents.

The current annual rate of $8.00 is about 28% of last year's earnings per share of $28.48, and about 25% of adjusted earnings per share of $32.31.

The company also spent $1.26 billion buying back its own stock last year, and its total debt fell from $9.3 billion to $8.5 billion. At the end of June, net of its cash, it owed about $8.0 billion, about two years of free cash flow. Interest cost $401 million, about 9 cents of every dollar of operating cash.

That picture changed in August. To help pay for Filtration Group, Parker Hannifin borrowed $7.75 billion, close to the $8.5 billion it owed at the end of June. In September, it sold bonds in dollars and euros to repay the shorter of those loans. It expects to pay for the CIRCOR aerospace business, about $2.55 billion, with new debt and cash on hand.

The raises have kept coming. The quarterly dividend has grown about 12% a year over the past ten years and about 14% a year over the past five. The latest raise was 11%, from $1.80 to $2.00 a quarter.

The quarterly rate has not gone up every calendar year. It held at $0.88 for eight straight quarterly dividends, from mid 2019 to early 2021, before the next raise. The total paid in each fiscal year still went up, which is how the company counts its streak.

The business is bigger and more profitable than it was 10 years ago...

You saw this table above. Here's what sits behind it.

Sales rose from $11.4 billion in fiscal 2016 to $21.5 billion in fiscal 2026, up about 89%. Earnings per share rose almost fivefold, from $5.89 to $28.48. Cash from operations rose from $1.2 billion to $4.4 billion.

Wider margins did much of the work. In fiscal 2016, Parker Hannifin kept about 14 cents of segment operating income from each dollar of sales. In fiscal 2026, it kept about 25 cents. It also turned about 20 cents of every sales dollar into operating cash, almost twice the 11 cents of a decade earlier.

Parker Hannifin reports two segments. Diversified Industrial had $14.4 billion of sales and $3.4 billion of segment operating income last year, a 23.8% margin. Aerospace Systems had $7.1 billion of sales and $1.8 billion of segment operating income, and its margin rose from 23.3% to 26.0% in a single year.

Remember Lindbergh's fuel system? Aerospace is now the highest margin part of the company.

What today's price assumes...

At about $973 a share on October 2, 2026, investors are paying about 34 times last year's reported earnings, or about 30 times adjusted earnings. At the end of fiscal 2016, they paid about 18 times.

Management expects fiscal 2027 earnings per share of $30.00 to $31.00, or $34.25 to $35.25 on an adjusted basis. That outlook leaves out Filtration Group and the CIRCOR business. Against the midpoints, today's price is about 32 times reported earnings and about 28 times adjusted earnings. Those are management's expectations.

So the price assumes Parker Hannifin keeps doing what it has done for the past decade, and that the two acquisitions pay off. If earnings keep compounding, the business can grow into that price. If growth slows while investors are paying 34 times earnings, the share price has room to fall even if the business does fine.

How it has held up when the market fell apart...

The stock has still fallen hard at times. It has dropped 25% or more four times in the past 10 years.

Every one of those drops ended in a new high. And through every one of them, the total dividend paid each fiscal year kept rising.

The other way to see the trend is the stock's 200 day average, its average closing price over the past 200 trading days, about nine to ten months. Over the past decade, the share price has closed above that line on 77% of trading days. As of October 2, it sits 2.9% above it.

The 200 day average is a long term trend line. It shows the direction the market has carried the stock. It says nothing about next week.

The bull case and the bear case...

Here is how we'd frame it.

The bull case:

What would prove the bull case wrong: segment margins slipping for several quarters in a row, or organic growth turning negative outside of a recession.

The bear case:

What would prove the bear case wrong: earnings continuing to compound while debt comes back down after the deals.

The four numbers that will tell the story from here: organic growth, segment margins, free cash flow and debt.

More next Wednesday.

Figures come from Parker Hannifin's fiscal 2016 results release (August 4, 2016), its annual reports on Form 10-K for fiscal 2016 through 2026, its fiscal 2026 results release (August 6, 2026), and its reports on Form 8-K filed November 12, 2025, August 13, 2026, September 8, 2026 and September 14, 2026. Share prices and dividend history are from Yahoo Finance daily data through October 2, 2026, with our own calculations. S&P 500 figures use the SPDR S&P 500 ETF (SPY). Past results do not promise future results.

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