Assessing the Upcoming Dividend and Financial Health of Absa Group Ltd
Absa Group Ltd (AGRPY) recently announced a dividend of $0.74 per share, payable on 2024-05-02, with the ex-dividend date set for 2024-04-18. 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 Absa Group Ltd's dividend performance and assess its sustainability.
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Absa Group Ltd is a financial services company that has five main business segments: Product Solutions Cluster, Everyday Banking, Relationship Banking, Absa Regional Operations RBB (ARO RBB), CIB, & Head Office, Treasury, and other operations. The majority is from the Corporate and Investment Bank (CIB) segment which includes prioritized new-to-bank clients across key growth and priority sectors. CIB continued to up-sell and cross-sell new products and services to existing clients. Geographically, the majority is from South Africa.
Absa Group Ltd's Dividend Analysis
A Glimpse at Absa Group Ltd's Dividend History
Absa Group Ltd has maintained a consistent dividend payment record since 2003. Dividends are currently distributed on a bi-annually basis. Below is a chart showing annual Dividends Per Share for tracking historical trends.
Absa Group Ltd's Dividend Analysis
Breaking Down Absa Group Ltd's Dividend Yield and Growth
As of today, Absa Group Ltd currently has a 12-month trailing dividend yield of 9.21% and a 12-month forward dividend yield of 9.36%. This suggests an expectation of increased dividend payments over the next 12 months.
Extended to a five-year horizon, this rate decreased to -10.80% per year. And over the past decade, Absa Group Ltd's annual dividends per share growth rate stands at -1.50%.
Based on Absa Group Ltd's dividend yield and five-year growth rate, the 5-year yield on cost of Absa Group Ltd stock as of today is approximately 5.20%.
Absa Group Ltd's Dividend Analysis
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 2023-06-30, Absa Group Ltd's dividend payout ratio is 0.52.
Absa Group Ltd's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks Absa Group Ltd's profitability 6 out of 10 as of 2023-06-30, suggesting fair profitability. 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. Absa Group Ltd's growth rank of 6 out of 10 suggests that the company has a fair growth outlook.
Revenue is the lifeblood of any company, and Absa Group Ltd's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. Absa Group Ltd's revenue has increased by approximately 7.00% per year on average, a rate that outperforms approximately 51.14% 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, Absa Group Ltd's earnings increased by approximately 12.40% per year on average, a rate that outperforms approximately 49.65% of global competitors.
Lastly, the company's 5-year EBITDA growth rate of 3.00%, which outperforms approximately 32.59% of global competitors.
Next Steps
Considering Absa Group Ltd's consistent dividend payments, its dividend growth rate, payout ratio, profitability, and growth metrics, investors may find the stock to be a compelling option for income-focused portfolios. The current analysis provides a positive outlook on the company's ability to sustain its dividends, backed by solid financial health and growth prospects. As the payment date approaches, investors will be weighing these factors in their decision-making. Will Absa Group Ltd continue to reward shareholders with reliable dividends, and how will it adapt to changing economic conditions? These are critical questions for value investors seeking stable returns in a dynamic market landscape.
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.