Carrier Global (CARR) raised its dividend 6.7% to $0.24 per share. Free cash flow of $2.1B provides 38% payout coverage.
Carrier’s residential sales plunged 38% while commercial HVAC orders jumped 50% from accelerating data center project wins.
Carrier achieved 23.1% dividend CAGR over five years versus Trane’s 12.2% rate despite Trane’s superior 13.7% profit margins.
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Carrier Global Corporation (NYSE: CARR) distributed $0.24 per share to investors on February 9, 2026, marking a 6.7% increase from the prior quarterly rate of $0.225. The payment arrives as the HVAC manufacturer navigates contrasting business dynamics: residential exposure creating near-term headwinds while commercial HVAC and data center wins drive future momentum.
Carrier returned approximately $3.7 billion to shareholders in 2025, including roughly $800 million in dividends and $2.9 billion in share repurchases. Free cash flow of $2.1 billion comfortably covered the dividend obligation, translating to a sustainable payout ratio of approximately 38% based on trailing cash flow.
The company’s 1.39% dividend yield sits below the industrial sector average, but the recent quarterly increase demonstrates management’s confidence despite operational challenges. With $2 billion in free cash flow projected for 2026 and planned share repurchases of $1.5 billion, dividend coverage remains secure even as the company invests in growth initiatives.
Carrier has delivered consistent dividend growth since its 2020 spin-off from United Technologies. The trailing twelve-month dividend of $0.915 per share represents a 23.1% compound annual growth rate over five years, accelerating from $0.32 per share in 2020 to $0.90 in 2025.
The February payment marks the sixth consecutive year of dividend increases, with no suspensions or cuts throughout the company’s independent history. Recent growth has accelerated: 2025’s 18.4% year-over-year increase followed a more modest 2.7% gain in 2024, suggesting management is prioritizing dividend growth as earnings stabilize.
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Carrier Global (CARR) receives an A- overall dividend grade, reflecting strong FCF coverage and payout ratio. Wall Street analysts currently rate CARR as a ‘Buy’ with a +7.2% upside to its price target.
Carrier’s dividend profile contrasts sharply with primary competitor Trane Technologies (NYSE: TT). Trane offers a 0.81% yield on an annualized dividend of $3.76 per share, with its most recent quarterly payment at $0.94 and an upcoming March payment increasing to $1.05.
While Trane’s yield is lower, its dividend has grown at a 12.2% CAGR over five years—nearly half Carrier’s growth rate. The divergence reflects Carrier’s catch-up trajectory as a newer independent entity. Trane’s 13.7% profit margin and 37% return on equity provide a more stable foundation for dividend payments compared to Carrier’s 6.82% profit margin and 10.9% return on equity.
Fourth quarter 2025 results revealed significant earnings pressure, with revenue of $4.84 billion declining 6% year-over-year and adjusted earnings per share of $0.34 falling 37% year-over-year. The residential segment bore the brunt, plunging 38% as channel destocking and weak housing markets pressured demand.
Offsetting residential weakness, commercial HVAC demonstrated resilience with orders surging 50% driven by data center project wins. Management expects data center revenue to reach $1.5 billion in 2026, up from approximately $1 billion in 2025. The aftermarket services business continues growing at double-digit rates for the fifth consecutive year, providing recurring revenue that supports dividend stability.
For 2026, Carrier projects sales of approximately $22 billion with adjusted earnings per share around $2.80, representing high single-digit growth. CFO Patrick Goris confirmed the company “intends to repurchase about $1.5 billion in shares” while maintaining dividend payments, reinforcing capital allocation priorities.
Recent insider transactions signal management confidence in the dividend’s sustainability. CEO David Gitlin acquired 90,872 shares on February 1, 2026, while CFO Patrick Goris added 40,750 shares on the same date. Gitlin had previously purchased 19,300 shares at $52.62 in November 2025, demonstrating personal conviction during the stock’s recent weakness.
Across seven executives, net insider buying totaled 114,433 shares on February 1 after accounting for tax-related disposals. The breadth of participation—spanning finance, operations, and business unit presidents—suggests company-wide confidence in the turnaround narrative and dividend trajectory.
Carrier trades at 40 times trailing earnings and 24 times forward earnings, reflecting investor expectations for margin recovery as residential markets stabilize. The current stock price of $67.01 has surged 27.36% year-to-date, pushing the Relative Strength Index to 83.60—well into overbought territory.
The stock’s recent momentum reflects market anticipation of residential recovery and data center growth rather than current fundamentals. Analysts maintain a consensus target of $71.85, implying modest upside from current levels. The elevated valuation increases sensitivity to any dividend policy changes, making consistent quarterly increases critical to maintaining investor confidence.
The dividend’s primary risk stems from continued residential market weakness. Management expects residential sales to decline by high single digits in 2026, with the first half down 20-25% before improving in the second half. Channel inventory has fallen 30-32% year-over-year, reaching 2018 levels, but demand recovery depends on interest rate trends and housing market activity.
Operating margin pressure presents another concern. The company executed $100 million in cost reductions during 2025, including eliminating 3,000 positions, primarily in the second half. First quarter 2026 operating margin is projected at approximately 10%, below historical levels, though management expects improvement as commercial HVAC growth accelerates.
The pending Riello divestiture will create a $350 million revenue headwind, though the exit of a lower-margin business should support profitability metrics. Commodity headwinds of roughly $60 million from copper, steel, and aluminum persist despite hedging strategies.
Carrier’s dividend sustainability hinges on successful execution in three growth areas. Commercial HVAC is expected to deliver double-digit growth for the sixth consecutive year, with orders up 80% year-over-year in Q4 2025. The data center opportunity provides significant upside, with applied orders tripling and the company introducing new cooling distribution units capable of 3 and 5 megawatt capacity in 2026.
Aftermarket services represent the most stable cash flow stream, with 70,000+ connected chillers up from 17,000 three years ago. Service contract attachment rates have tripled, reaching nearly 60% in the Climate Solutions Americas segment. Modifications and upgrades sales grew 20% in 2025, identified as the highest growth potential over the next five years.
CEO David Gitlin emphasized capital allocation priorities during the recent earnings call: “We remain focused on investing in the highest return opportunities, maintaining a strong balance sheet, and returning cash to shareholders.” With free cash flow projected to cover both the dividend and substantial share repurchases, the quarterly payment appears secure barring significant deterioration in commercial markets.
Carrier’s dividend combines strong growth momentum with modest current income. The 6.7% quarterly increase demonstrates management’s commitment to returning capital despite near-term earnings volatility. Free cash flow coverage remains comfortable, insider buying signals confidence, and the company’s positioning in data center infrastructure provides a compelling growth narrative.
However, the 1.39% yield limits appeal for income-focused investors, particularly when peer Trane offers similar exposure with superior profitability metrics. The dividend’s strength lies in its growth trajectory rather than current yield, making it more suitable for investors prioritizing capital appreciation with modest income, rather than those seeking immediate cash flow. The recent stock surge to overbought levels suggests waiting for consolidation before initiating positions, though the dividend’s sustainability through the residential downturn appears secure based on diversified revenue streams and robust cash generation.
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