Air Products and Chemicals, Inc. (NYSE:APD) offers investors a mix of steady industrial-gas demand, long-standing customer relationships, and years of dividend growth. However, its investment case is now becoming more complicated since the company is reviewing its costly clean-energy projects while at the same time attempting to restore earnings growth.
In the third quarter of fiscal 2026, revenue went up by 5% compared with the previous year, reaching $3.16 billion, and adjusted earnings per share (EPS) rose by 12% to $3.47. Adjusted operating income increased by 9% to $810 million, and the adjusted operating margin improved by 110 basis points to 25.6%. The fact that these results have been achieved indicates that the core of the business is still resilient even though costs have gone up, supporting its position among the best blue-chip dividend stocks for investors seeking a combination of income and business stability. Find other rankings here.
The figures reported tell another story: Air Products suffered an operating loss of $2.1 billion and had a share loss of $6.47, mainly due to the fact that it had to take into account large charges connected with the exit from various projects. This point is important since while adjusted earnings show the company’s operational progress, the charges also highlight the capital-allocation risks involved in its growth strategy.
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Forward P/E: A discount with conditions
Air Products and Chemicals, Inc. has a forward P/E of about 20.4x and a trailing P/E of 31.0x. The difference indicates that people expect earnings to rebound from the effect of the exceptional charges; it doesn’t mean that investors are paying only 20 times the current reported profits. The forward multiple is lower than the 20.9x that APD reported for June 2025 and the 21.6x shown in the comparison period for that same month, yet it is still higher than the 19.0x level at the end of 2025. This indicates a certain amount of valuation relief, but not a clear bargain.
APD’s implied earnings yield, based on forward earnings multiplied by 20.4, is approximately 4.9%, which is less than the 5.2% 10-year Treasury yield that was reported on October 13, 2026. The two options are not a direct exchange on a risk-equivalent basis since equities have the potential for earnings growth and dividend rises, whereas Treasuries offer payments as specified if held until maturity. Yet APD has to achieve substantial earnings growth in order to compensate investors for the risks involved in its business and in the way it allocates capital.
Linde, which is one of the main competitors in the industrial-gases sector, has a higher forward P/E of about 23.6x. The discount offered by APD is understandable in view of the problems it has encountered with its projects; it only becomes appealing if management turns its portfolio review into ongoing increases in earnings and cash flow. Read the full analysis: Linde (LIN) vs. Air Products (APD): Racing for the Chip Boom
Dividend: Covered, but capital spending matters
Air Products and Chemicals, Inc. offers an annual dividend of $7.24 per share, which gives a yield of around 2.6%. With respect to the adjusted EPS guidance for fiscal 2026 of $13.39 to $13.49, the implied payout ratio is about 54%. There is still a reasonable amount of earnings to spare, even though adjusted EPS doesn’t mean the same as cash available for distribution. APD is just six years away from becoming a Dividend King, with 44 consecutive years of dividend growth under its belt. The #3 company on our blue-chip dividend stocks list has already achieved this feat, growing its payouts for 54 years in a row.
The management anticipates APD’s capital spending of about $3.5 billion for fiscal 2026, even though it has scaled back some of its clean-energy projects. The need for execution, the cost of projects, debt requirements, and the weaker industrial demand continue to be the main risks to free cash flow and future dividend growth.
Bottom Line
APD’s dividend is supported by the expected adjusted earnings and further increases could boost total returns; however, the 2.6% yield by itself does not close the gap with Treasury yields. The shares provide a reasonable opportunity for recovery, not a risk-free source of income: investors must see proof that better operating performance will lead to steady cash generation before they regard the forward P/E discount as attractive.
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This article is originally published at Insider Monkey.
