Before investing, your individual circumstances should be considered so you should consider taking independent financial advice. Should you invest, the value of your investment may rise or fall and your capital is at risk. But I think that Halma’s steady increases show stability over time, which makes the company attractive to me as an investor. The company is a dividend aristocrat and has been increasing its payouts to shareholders for the last 43 years.īy itself, an increasing dividend isn’t always a sure indicator of a good investment opportunity. The final reason I think Halma shares might be a great investment for me is its dividend. The company has twice as much cash as it had in 2019, which should allow it to respond well to opportunities that it sees in the future. Lastly, the company has good financial liquidity.
At the moment, Halma’s interest payments on its debt account for less than 3% of its operating income, which tells me that the company is unlikely to have any problems around its debt. The organisation is also well in control of its debt. Its capital structure looks good to me, with around £713m in cash and £794m in total liabilities on its balance sheet, I think that it’s highly unlikely that the company will have any bankruptcy problems. Halma also has an impressive financial position. In my view, the structure of Halma’s business model is another strength of the company. Its businesses are separate from one another and make their own decisions, empowering their management and encouraging an entrepreneurial spirit. Individual subsidiaries make their own decisions, rather than taking orders from a central office. One of the keys to Warren Buffett’s success at Berkshire Hathaway is its decentralised culture. As a result, Halma’s operations are protected by high barriers to entry for competitors. This protects the company’s impressive cash generation capacity.ĭisrupting a dominant player in a small sector, such as Halma, would be expensive and ultimately unrewarding. Operating in niche markets means that Halma’s businesses have few competitors. That makes it difficult to understand, but it also brings an important advantage. Halma’s businesses operate in highly specialised industries. For context, Halma’s return here stacks up impressively against Google (74.5%), Meta (62.75%), and Starbucks (33.24%). That’s a return on fixed assets of just under 144%.
The company has £194m in fixed assets and generates just under £279m in operating income. Halma is extremely impressive in this regard.
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