An In-depth Look at the Dividend Performance and Sustainability of Smiths Group PLC
Smiths Group PLC (SMGZY, Financial) recently announced a dividend of $0.35 per share, payable on 2023-12-01, with the ex-dividend date set for 2023-10-19. As investors look forward to this upcoming payment, the spotlight also shines on the company's dividend history, yield, and growth rates. Using the data from GuruFocus, let's delve into Smiths Group PLC's dividend performance and assess its sustainability.
What Does Smiths Group PLC Do?
Smiths Group PLC, which began as a London jeweler in the 19th century, has evolved into a company that manufactures niche products in security- or safety-sensitive industries. Today, the business is divided into four divisions: mechanical seals, weapons detection, electrical connectors, and specialized hoses. The end customers for these products include airports, NASA, government security or defense departments, and hospitals.
A Glimpse at Smiths Group PLC's Dividend History
Smiths Group PLC has upheld a consistent dividend payment record since 2011, with dividends currently distributed biannually. The chart below illustrates the company's annual Dividends Per Share for tracking historical trends.
Breaking Down Smiths Group PLC's Dividend Yield and Growth
As of today, Smiths Group PLC has a 12-month trailing dividend yield of 2.50% and a 12-month forward dividend yield of 2.64%. This suggests an expectation of increased dividend payments over the next 12 months.
Over the past three years, Smiths Group PLC's annual dividend growth rate was 8.10%. However, when extended to a five-year horizon, this rate decreased to -1.40% per year. Based on Smiths Group PLC's dividend yield and five-year growth rate, the 5-year yield on cost of Smiths Group PLC stock as of today is approximately 2.33%.
The Sustainability Question: Payout Ratio and Profitability
To gauge the sustainability of the dividend, it's crucial to evaluate the company's payout ratio. The dividend payout ratio provides insights into the portion of earnings the company distributes as dividends. A lower ratio suggests that the company retains a significant part of its earnings, thereby ensuring the availability of funds for future growth and unexpected downturns. As of 2023-07-31, Smiths Group PLC's dividend payout ratio is 0.64.
Smiths Group PLC's profitability rank of 7 out of 10 as of 2023-07-31, suggests good profitability prospects. The company has reported positive net income for each year over the past decade, further solidifying its high profitability.
Growth Metrics: The Future Outlook
For dividends to be sustainable, a company must have robust growth metrics. Smiths Group PLC's growth rank of 7 out of 10 suggests that the company's growth trajectory is good relative to its competitors.
Revenue is the lifeblood of any company, and Smiths Group PLC's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. Smiths Group PLC's revenue has increased by approximately 10.30% per year on average, a rate that outperforms approximately 61.76% of global competitors.
The company's 3-year EPS growth rate showcases its capability to grow its earnings, a critical component for sustaining dividends in the long run. During the past three years, Smiths Group PLC's earnings increased by approximately 57.30% per year on average, a rate that outperforms approximately 86.72% of global competitors.
Lastly, the company's 5-year EBITDA growth rate of -7.80% outperforms approximately 16.58% of global competitors.
Conclusion
Based on Smiths Group PLC's consistent dividend payments, respectable dividend growth rate, reasonable payout ratio, strong profitability, and impressive growth metrics, it's clear that the company has a solid foundation for maintaining its dividends. Investors seeking a stable dividend stock may find Smiths Group PLC an attractive option. However, as with any investment, it's crucial to conduct thorough research and consider the company's overall financial health before making a decision.
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This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
