Assessing the Sustainability of Victrex PLC's Upcoming Dividend
Victrex PLC (VTXPF, Financial) recently announced a dividend of $0.46 per share, payable on 2024-02-23, with the ex-dividend date set for 2024-01-25. 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 look into Victrex PLC's dividend performance and assess its sustainability.
What Does Victrex PLC Do?
Victrex is a British specialty chemicals company whose business is based predominantly on manufacturing and creating solutions using polyetheretherketone, or PEEK, an ultra-high-performance lightweight plastic. Around 40% of sales are generated in Europe, with Asia and the Americas contributing 30% each. The business has two segments. The industrial segment targets transportation, energy, electronics, and manufacturing, while the medical segment provides healthcare solutions for the implantable device markets.
A Glimpse at Victrex PLC's Dividend History
Victrex PLC has maintained a consistent dividend payment record since 2010, with dividends currently distributed on a bi-annual basis. Below is a chart showing annual Dividends Per Share for tracking historical trends.
Breaking Down Victrex PLC's Dividend Yield and Growth
As of today, Victrex PLC (VTXPF, Financial) currently has a 12-month trailing dividend yield of 3.67% and a 12-month forward dividend yield of 3.84%, suggesting an expectation of increased dividend payments over the next 12 months. Over the past three years, Victrex PLC's annual dividend growth rate was 8.90%. Extended to a five-year horizon, this rate decreased to 1.90% per year. And over the past decade, Victrex PLC's annual dividends per share growth rate stands at 4.10%.
Based on Victrex PLC's dividend yield and five-year growth rate, the 5-year yield on cost of Victrex PLC stock as of today is approximately 4.03%.
The Sustainability Question: Payout Ratio and Profitability
To assess the sustainability of the dividend, one needs 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 2023-09-30, Victrex PLC's dividend payout ratio is 0.84, which may suggest that the company's dividend may not be sustainable.
Victrex PLC's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks Victrex PLC's profitability 8 out of 10 as of 2023-09-30, suggesting good profitability prospects. The company has reported positive net income for each of the past decade, further solidifying its high profitability.
Growth Metrics: The Future Outlook
To ensure the sustainability of dividends, a company must have robust growth metrics. Victrex PLC's growth rank of 8 out of 10 suggests that the company's growth trajectory is good relative to its competitors.
Revenue is the lifeblood of any company, and Victrex PLC's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. Victrex PLC's revenue has increased by approximately 4.70% per year on average, a rate that underperforms approximately 67.4% 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, Victrex PLC's earnings increased by approximately -1.70% per year on average, a rate that underperforms approximately 68.79% of global competitors.
Lastly, the company's 5-year EBITDA growth rate of -9.60%, which underperforms approximately 84.36% of global competitors.
Next Steps
Considering Victrex PLC's consistent dividend payments, its historical growth rate, and the current payout ratio, investors should cautiously evaluate the sustainability of the company's dividends. While the profitability rank looks promising, the growth metrics present a mixed picture. Investors should keep an eye on the company's ability to maintain its dividend growth in the face of these challenges. For those seeking high-dividend yield stocks, GuruFocus Premium users can utilize the High Dividend Yield Screener for more investment opportunities.
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.
