ABB Ltd's Dividend Analysis
Delving into ABB Ltd's Upcoming Dividend and Historical Payments
ABB Ltd (ABBNY) recently announced a dividend of $1 per share, payable on a to-be-announced date, with the ex-dividend date set for 2024-03-25. 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 ABB Ltd's dividend performance and assess its sustainability.
What Does ABB Ltd Do?
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ABB is a supplier of electrical equipment and automation products. Founded in the late 19th century, the company was created out of the merger of two old industrial companies: ASEA and BBC. Its products include electrical equipment, industrial robots, and equipment used for industrial automation that are sold via approximately 19 business divisions. ABB is the number one or two supplier in two thirds of its product segments.
A Glimpse at ABB Ltd's Dividend History
ABB Ltd has maintained a consistent dividend payment record since 2006, with dividends currently distributed on a yearly basis. Below is a chart showing annual Dividends Per Share for tracking historical trends.
Breaking Down ABB Ltd's Dividend Yield and Growth
As of today, ABB Ltd currently has a 12-month trailing dividend yield of 1.94% and a 12-month forward dividend yield of 2.11%, suggesting an expectation of increased dividend payments over the next 12 months. However, ABB Ltd's dividend yield of 1.94% is near a 10-year low and underperforms 45.51% of global competitors in the Industrial Products industry, suggesting that the company's dividend yield may not be a compelling proposition for income investors.
Over the past three years, ABB Ltd's annual dividend growth rate was 2.40%. Extended to a five-year horizon, this rate decreased to 0.50% per year. And over the past decade, ABB Ltd's annual dividends per share growth rate stands at 1.90%.
Based on ABB Ltd's dividend yield and five-year growth rate, the 5-year yield on cost of ABB Ltd stock as of today is approximately 1.99%.
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, ABB Ltd's dividend payout ratio is 0.45.
ABB Ltd's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks ABB Ltd'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
ABB Ltd's growth rank of 7 out of 10 suggests that the company's growth trajectory is good relative to its competitors. ABB Ltd's revenue has increased by approximately 10.90% per year on average, a rate that outperforms approximately 60.54% 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, ABB Ltd's earnings increased by approximately 81.00% per year on average, a rate that outperforms approximately 92.83% of global competitors.
Lastly, the company's 5-year EBITDA growth rate of 30.80%, which outperforms approximately 85.8% of global competitors.
Next Steps
In conclusion, ABB Ltd's upcoming dividend, consistent historical payments, and moderate growth in dividend rates are attractive features for value investors. The company's stable payout ratio and strong profitability underscore the sustainability of its dividends. Moreover, ABB Ltd's robust growth metrics indicate a positive outlook for future dividend sustenance and potential increases. With these factors in mind, investors may consider ABB Ltd as a candidate for their income-generating portfolios. 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.
This article first appeared on GuruFocus.