Insights into the Upcoming Dividend Payment and Historical Performance
Essity AB (ETTYF) recently announced a dividend of $7.75 per share, payable on 2024-03-28, with the ex-dividend date set for 2024-03-22. 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 Essity AB's dividend performance and assess its sustainability.
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Essity AB is a health and hygiene company spun out of Svenska Cellulosa in June 2017. Essity's products span the feminine-care, baby-care, toilet paper, facial tissue, and wet wipes categories, as well as hand soap, hand sanitizers, and tissue dispensers for institutional customers. Essity also offers medical solutions in the form of wound care, orthopedics, and compression therapy, accounting for around 7% of net sales. Essity operates in 150 markets and generates over 50% of its revenue in Europe, although it also maintains significant exposure to emerging markets (37% of net sales in 2022).
Essity AB's Dividend Analysis
A Glimpse at Essity AB's Dividend History
Essity AB has maintained a consistent dividend payment record since 2020. Dividends are currently distributed on a yearly basis. Below is a chart showing annual Dividends Per Share for tracking historical trends.
Essity AB's Dividend Analysis
Breaking Down Essity AB's Dividend Yield and Growth
As of today, Essity AB currently has a 12-month trailing dividend yield of 2.83% and a 12-month forward dividend yield of 2.97%. This suggests an expectation of increased dividend payments over the next 12 months.
Over the past three years, Essity AB's annual dividend growth rate was 5.10%. Extended to a five-year horizon, this rate increased to 5.40% per year. Based on Essity AB's dividend yield and five-year growth rate, the 5-year yield on cost of Essity AB stock as of today is approximately 3.68%.
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 2023-12-31, Essity AB's dividend payout ratio is 0.50.
Essity AB's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks Essity AB's profitability 7 out of 10 as of 2023-12-31, suggesting good profitability prospects. The company has reported positive net income for each of year over 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. Essity AB'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 Essity AB's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. Essity AB's revenue has increased by approximately 6.50% per year on average, a rate that underperforms than approximately 50.84% 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, Essity AB's earnings increased by approximately 1.10% per year on average, a rate that underperforms than approximately 58.37% of global competitors.
Lastly, the company's 5-year EBITDA growth rate of -1.70%, which underperforms than approximately 67.11% of global competitors.
Next Steps
In conclusion, Essity AB's upcoming dividend payment, historical dividend growth, and current yields are significant considerations for investors. The company's moderate payout ratio and strong profitability rank reflect a balanced approach to returning value to shareholders while retaining earnings for future investments. However, growth metrics present a mixed picture, with revenue growth outpacing a majority of global competitors but EPS and EBITDA growth rates lagging behind. These factors combined suggest that while Essity AB's dividend may be sustainable in the near term, investors should closely monitor growth indicators for long-term dividend viability. For those seeking to diversify their portfolio with dividend-paying stocks, GuruFocus Premium users can screen for high-dividend yield stocks using the High Dividend Yield Screener.
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.
