Badger Meter, Inc. (NYSE:BMI)’s latest dividend increase is a positive signal for income-focused investors, even though the stock is not a traditional high-yield dividend play. On August 14, 2026, Badger Meter announced a 10% increase in its quarterly dividend to $0.44 per share from $0.40, bringing the annualized payout to $1.76. More importantly, this marks the company’s 34th consecutive year of annual dividend growth.
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Dividend Strength
The most encouraging part of Badger Meter, Inc. (NYSE:BMI)’s dividend story is that the increase is supported by a business that has historically generated substantial cash. In 2025, the company generated $183.7 million in operating cash flow and $169.7 million in free cash flow, while paying $43.5 million in dividends. That gave the company plenty of room to fund the dividend while still investing in acquisitions and the business.
The balance sheet also provides a meaningful cushion. Badger Meter ended 2025 with $226 million of net cash and no borrowings. The company subsequently used cash for the UDlive acquisition, leaving $95.7 million in cash at the end of June 2026, but it still had access to an undrawn $150 million credit facility.
The payout ratio remains conservative. The new $1.76 annual dividend is only about 37% of 2025 diluted EPS of $4.79. Even using the first-half 2026 diluted EPS of $1.95, the payout does not look stretched. There is also a nice history behind the latest increase. Badger Meter raised its dividend by 26% in 2024, 18% in 2025, and now 10% in 2026. The rate of growth has moderated, but management is still consistently increasing the payout.
Bull Case
The biggest argument in favor of Badger Meter, Inc. (NYSE:BMI)’s dividend is the company’s exposure to the long-term modernization of water infrastructure. Its BlueEdge platform combines smart meters, communications, data analytics, and software. Utilities are increasingly moving toward digital water management, which can create recurring demand for Badger Meter’s products and services. Management expects high-single-digit growth over the next five years, supported by the digital transformation of the water sector.
There are also signs that the current slowdown may be temporary. Second-quarter 2026 sales fell 7% year over year, and diluted EPS declined 13% to $1.02. Yet sales increased 10% sequentially from the first quarter, while management said awarded AMI projects were beginning to move into deployment. It expects the revenue run rate to improve in the second half of the year.
Cash generation is another important positive. During the first six months of 2026, Badger Meter, Inc. (NYSE:BMI) generated $60.6 million in operating cash flow and paid $23.3 million in dividends. The company also spent $94.4 million on the UDlive acquisition and $63.5 million on share repurchases during the period. That suggests management is not simply protecting the dividend. It is trying to balance dividends, buybacks, acquisitions, and reinvestment.
Bear Case
The main concern is not the safety of the dividend today. It is the possibility that earnings growth temporarily falls behind dividend growth. The second quarter showed some weakness. Revenue declined 7% year over year, operating earnings dropped 12%, and EPS fell 13%. Utility water sales were down 8%, while the company continues to deal with uneven timing of AMI projects. Management expects full-year revenue excluding acquisitions to be roughly flat with 2025.
That makes the 10% dividend increase more aggressive than the company’s near-term earnings outlook. There is also a valuation issue for dividend investors. Badger Meter, Inc. (NYSE:BMI) has traditionally been more of a dividend-growth stock than a high-yield stock. The $1.76 annual payout is attractive from a growth perspective, but investors buying the shares primarily for current income should not expect a yield comparable to mature industrial or utility stocks. The acquisition strategy is another factor worth watching. Badger Meter spent $94.4 million on UDlive in the first half of 2026 after spending $184 million on acquisitions in 2025. These deals could strengthen long-term growth, but they also consume cash that could otherwise support dividends and buybacks.
Conclusion
Badger Meter, Inc. (NYSE:BMI)’s latest dividend increase looks well supported rather than symbolic. The company has a 34-year record of annual dividend growth, a relatively low payout ratio, strong historical free cash flow, and a balance sheet that gives it financial flexibility. The 10% increase is particularly encouraging because it came during a year in which earnings and revenue have temporarily softened.
The near-term numbers are not perfect, and investors should keep an eye on AMI project timing, earnings growth, and acquisition spending. Still, the weakness appears manageable rather than threatening to the dividend. For long-term dividend-growth investors, Badger Meter is capable of continuing to grow, provided the company’s expected recovery in the second half of 2026 materializes. It is not a stock to buy for a huge current yield. The appeal is the combination of a modest but growing payout, strong cash generation, and exposure to a long-term water infrastructure trend. Overall, the dividend looks safe, with a reasonable path to continued growth. Badger Meter’s dividend announcement
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Disclosure: None. This article is originally published at Insider Monkey.
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